Uber lawyer says board, ex-CEO knew of evidence withheld
from Waymo case
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[November 30, 2017]
By Heather Somerville and Dan Levine
SAN FRANCISCO (Reuters) - Uber Technologies
Inc's former chief executive and some board members knew of a letter
alleging employees had stolen trade secrets, but the document was
withheld from a high-stakes lawsuit, a company attorney testified on
The admission that the letter was not produced in the lawsuit drew a
sharp retort from U.S. District Judge William Alsup, who is overseeing
the case and has asked U.S. prosecutors to investigate it, raising the
possibility of criminal charges.
"On the surface it looks like you covered this up," Alsup told Uber in
court, later adding he had never seen a case like this. “It seems like
there are so many bad things that Uber has done in this case. Usually
it’s more divided.”
Alphabet Inc's <GOOGL.O> Waymo has accused the ride services company of
stealing confidential information about its self-driving car designs,
the highest-stakes challenge on a list of litigation and investigations
inherited by Dara Khosrowshahi when he joined Uber as CEO in August.
The case has hobbled Uber's self-driving car program and Alphabet is
seeking hefty claims. Uber has denied that it used Waymo trade secrets
in its autonomous vehicle program.
The company recently signed off on a multibillion-dollar investment from
Japan's SoftBank Group Corp <9984.T> that, if successful, would
demonstrate confidence in Uber's long-term prospects.
SoftBank launched a tender for Uber shares this week and the Japanese
company has said some notable early investors planned to sell.
The letter from former Uber security analyst Richard Jacobs alleges Uber
trained employees to steal trade secrets and hide their activities by
using communications programs with disappearing messages and a separate
At the hearing in San Francisco federal court, Uber in-house attorney
Angela Padilla testified she did not disclose the letter to Uber
attorneys and an outside law firm that were defending Uber in the Waymo
"There was no effort to cover this up," Padilla said, adding that she
takes "full responsibility" for not circulating the letter more widely.
She said the allegations in the letter had seemed "quite fantastical" to
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The Uber logo is seen on mobile telephone in London, Britain,
September 25, 2017. REUTERS/Hannah McKay
Jacbos testified in court this week that his lawyer sent a 37-page letter to
Padilla describing a group within Uber called marketplace analytics aimed at
acquiring trade secrets, code base and competitive intelligence.
Jacobs' attorney also sent a letter with the allegations to the U.S. Department
In his testimony, Jacobs described an intelligence operation inside Uber to
research competitors and gather data about them, and use technology to avoid a
Alsup has agreed to Waymo's request to delay a trial, which had been scheduled
for next week, to give the Alphabet unit more time to investigate the
allegations. The trial is now scheduled to begin in early February.
In court on Wednesday, Padilla said Uber viewed the Jacobs letter as a tactic by
a disgruntled former employee to secure money from the company.
"We felt that Jacobs was trying to extort the company," she said.
Uber eventually settled the matter by paying Jacobs $4.5 million, including a
year-long consulting contract, and a further $3 million to his lawyer.
"That is a lot of money," Alsup said. "And people don't pay that kind of money
for BS. And you certainly don't hire them as consultants if you think everything
they've got to contribute is BS."
Padilla said the company had weighed the distraction of a drawn-out battle with
Jacobs, as well as security concerns for employees named in the letter. An Uber
manager, Mat Henley, who also testified on Wednesday said that he had fired
Jacobs for poor performance.
Much of the testimony surrounded Uber employees' use of communications
applications that did not store messages, including Wickr and Telegram.
Uber CEO Khosrowshahi weighed in by tweeting on Wednesday that he had changed
the communications policy in September to forbid use of such applications to
Henley said that the group that Jacobs alleged stole trade secrets is now
focused on counterintelligence to protect Uber from rivals.
(Reporting by Dan Levine, editing by Peter Henderson and Meredith Mazzilli)
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