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CAN AN EMPLOYEE TAKE YOUR COMPANY’S TRADE SECRETS TO A COMPETING BUSINESS?

CAN AN EMPLOYEE TAKE YOUR COMPANY’S TRADE SECRETS TO A COMPETING BUSINESS?

 

On February 23, 2017, Waymo, LLC (owned by Google’s parent company), filed a lawsuit against Uber Technologies, Inc., Ottomotto LLC, and Otto Trucking, LLC.  The basis of Waymo’s lawsuit is for violation of the defense of trade secret act.

The three main questions raised by this lawsuit are:

1)         Can an employee take a company’s secret sauce (i.e. trade secrets)?

2)         Can a departing employee take a company’s confidential information with them?

3)         Can a non-signatory to an arbitration agreement force a signatory to participate in arbitration?

The facts in this case surround a highly talented (former) employee of Waymo, Anthony Levandowski.  Mr. Levandowski was a manager in Waymo’s self-driving car project.  During his time as a manager, he worked and had access to Waymo’s secret sauce for its self-driving cars, namely its LiDAR technology.  The LiDAR technology is the heart of Waymo’s self-driving cars.

Waymo alleges that one month before Mr. Levandowski abruptly resigned from Waymo, he downloaded over 14,000 highly confidential business files, which included information regarding its secret sauce, the LiDAR technology.

During the time, Mr. Levandowski was employed at Waymo, he started a competing business, named Otto Trucking, LLC.  This company was formed with another former employee of Google.  After Mr. Levandowski resigned from Waymo, a handful of Waymos’s employees left to join Otto Trucking, LLC. Within a few months after starting Otto Trucking, Uber purchased it for $680 million.

Waymo was already investigating Mr. Levandowski’s abrupt resignation, along with a handful of other employees who reportedly left to go work for Otto Trucking.  Waymo’s suspicions of wrong doing by Mr. Levandowski increased when it learned that Uber purchased his start-up company (that was not even a year old) for an astonishing amount of money.  Further solidifying Waymo’s suspicions is when an employee was accidentally copied on an email to Uber employees from a vendor of one of its LiDAR components. The email included an attachment of an Otto Trucking radar system that was strikingly similar to Waymo’s design. Waymo then filed its lawsuit.

Addressing the first two questions raised in this lawsuit: Employers who rely on confidential information to compete should take steps to protect its proprietary information.  A trade secret is any information that is unique and valuable to your business and that is not known to the general public.  A trade secret is oftentimes a business’s “secret sauce,” the thing that helps it stand apart from the competition and makes its customers choose it.  Because a trade secret can make or break a business, there are state and federal laws expressly meant for protecting businesses against the unauthorized sharing of trade secret information.  However, in order for those laws to apply to your California business’s trade secrets, employers must take affirmative steps to protect its trade secrets such as requiring employees to enter into a confidential agreement, restricting access to trade secret information, and labeling all trade secret information as confidential.

In the event that you did not have a former employee sign a non-disclosure agreement, there are a few causes of action available to you such as an injunction, filing a civil lawsuit for tortious interference with contractual relations, intentional interference with business relations, misappropriation of trade secrets and proprietary information, and civil conspiracy

Uber has also filed a motion that the case be moved to arbitration, arguing that Waymo's accusations are based entirely on actions taken by Levandowski while he was still an employee of the company, and as such falls under his employee agreement. This issue will be addressed in a separate blog as this case addresses an emerging hot legal topic.

Contact a Pleasanton Employment Attorney

If an employee takes your company’s trade secrets, do not take any chances and contact the employment lawyers at Garcia & Gurney, ALC at 925-468-0400 to schedule your initial consultation today. We serve clients throughout the Pleasanton, Alameda, and Contra Costa areas.

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Garcia & Gurney, ALC
7041 Koll Center Parkway, Suite 240
Pleasanton, CA, 94566 USA
925-468-0400