Judge stalls Uber trade-secret theft trial after learning upstart 'ran a trade-secret stealing op'

Cab-hailing app maker in Wayyyyyymo trouble

A judge today delayed the start of a trade-secret theft case against Uber – after evidence suggesting the upstart operated a secret trade-secret-stealing unit was revealed at the last minute.

US district judge William Alsup said it would be a "huge injustice" for the trial to start as scheduled next week, after he was sent a letter by the US Attorney for Northern California last week that shed light on Uber's secretive Strategic Services Group.

"If even half of what's in that letter is true it would be a huge injustice to force Waymo to go to trial and not be able to prove the things that are said in that letter," Alsup said during a hearing Tuesday morning in Uber's home city, San Francisco.

This bombshell follows the submission of written testimony by Uber's former security analyst Richard Jacobs; he appears to have been the US Attorney's source of information about the secretive unit.

Both the US Attorney's letter and Jacobs written testimony, as well as related filings from Uber and Alphabet-owned Waymo – which claims its trade secrets were stolen by Uber – have been heavily redacted [PDF] to the point where it is impossible to divine any details.

However Jacobs' testimony under oath and in public court provided some remarkable details. According to the security analyst, Uber actively sought to steal trade secrets from its rivals and set up the unit to do so.

The unit worked in parallel to Uber, and used "anonymous servers" that were separate from the main company to carry out its work. The unit also ran its own Wickr messaging service that was "invisible… not part of the regular server system," and which automatically deleted messages, covering its trails.

The judge and Waymo's lawyer quizzed Jacobs, grilling him on specific allegations including that Uber had acquired the code base of rival operators as well as details of their drivers and business metrics.

Discovery

They also asked about training that the unit had been given to evade discovery and investigation including hiding communications, copying lawyers on letters in order to gain legal privilege, encryption, and using email only as a "last resort."

Jacobs is said to have claimed that his unit was told not to "create a paper trail that could come back to haunt Uber" – although where and how Jacobs made that claim is unclear since all the documents are under seal and neither the judge nor Waymo lawyer referenced where the information had come from.

In response, Jacobs was notably anxious and evasive. He told the judge he did not feel the work he carried out was illegal, but did worry about whether it was ethical because it "felt overly aggressive and invasive."

In one critical question in relation to the Waymo case – where Uber is alleged to have hired Waymo's star engineer Anthony Levandowski and his document dump of Waymo trade secrets – Jacobs was asked whether he had heard from his manager that trade secrets had been successfully take from a competitor.

After a very long pause, Jacobs denied he had. The judge expressed clear displeasure. Similarly long pauses accompanied other similar questions.

The existence of such a unit deals a huge blow to Uber's argument that it never used or even saw the 4,000 documents that Levandowski secretly downloaded while still working at Waymo – a fact that was only discovered months later during a security audit.

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It also brings Uber very close to both contempt of court and criminal conduct charges. The judge has repeatedly criticized Uber in strong terms for withholding information and he had previously suspected possible criminal behavior.

In May, Alsup unexpectedly referred the case to the US Attorney's office. At the time he noted that "the court takes no position on whether a prosecution is or is not warranted," but the order was unusual and almost certainly led to the letter from the US Attorney warning about the secret unit.

Source

Jacobs' allegations of a trade-secret stealing unit appear to have been sent in a letter from his attorney to Uber – a letter that Uber should have provided the court and Waymo as part of discovery but failed to do so – a situation that could also implicate Uber's attorneys.

Under questioning, Jacobs trod a very careful line where he claimed to be assisting the US Department of Justice in discovering whether any of the allegations contained within his letter were actually true. He also said that he was unemployed but appears to be on a million-dollar "consulting" contract with Uber that has an additional $1.5m payout at the end of that agreement.

Also in court was current Uber employee Ed Russo, who was a part of the same unit, and who denied Jacobs' allegations, stating that they were untrue. Russo also denied that part of his jobs was to steal trade secrets.

Judge Alsup has already ordered the trial be delayed following the revelations, and he informed Uber's lawyers he would already be seeking additional information including unredacted versions of correspondence with Jacobs and a list of everyone at Uber that was using its Wickr installation.

An already extraordinary trial has just got bigger. ?


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