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Uber under federal investigation for industrial espionage

On Behalf of | Dec 3, 2017 | Blog

The U.S. Justice Department is investigating the ride-sharing company Uber for possible industrial espionage resulting in the possible theft of trade secrets from its rivals. The allegations triggered a delay in the high-profile trial in which it is accused of stealing autonomous car technology from the Google-spinoff Waymo.

The allegations came in the form of a 37-page letter sent in May to an Uber lawyer by Uber’s former manager of global intelligence. In the letter, the former manager claimed he had been wrongfully demoted and terminated for blowing the whistle on the company’s alleged misconduct.

The investigation became public on Nov. 28, when it came up during a court hearing in the Uber-Waymo dispute. This led to a review of Uber’s overall corporate culture, which has been highly criticized over the past year for allowing sexual harassment, the thwarting of regulators, and the cover-up of a massive hack that exposed the personal information of some 57 million customers and hundreds of thousands of drivers.

The former global intelligence manager testified that Uber had created a “Marketplace Analytics” unit with the purpose of stealing trade secrets from overseas competitors. He did not specify the competitors who were targeted.

He also alleged that Uber personnel used a messaging system called Wickr, which automatically deletes messages, in order to protect itself from potential legal trouble. It also worked to eliminate all digital trails and trained its autonomous vehicle engineers to conceal their electronic footprints, he said.

One of Uber’s lawyers argued that the secretive communications were intended to protect employee safety, but the judge was not swayed by that argument, according to the Associated Press.

Also according to the former manager, Uber’s industrial espionage team brought in former CIA agents to assist it with surveillance. His letter said that Uber had stolen Waymo’s trade secrets and other intellectual property from U.S. companies.

During questioning, however, the man said that allegation was mistaken. He said he knew of no espionage against companies in the U.S. He claimed to have spent too little time reviewing the letter before it was sent.

He also testified, however, that Uber had paid him $4.5 million in a confidential settlement over the wrongful termination allegation. Part of that settlement involved Uber stock, a provision prohibiting him from saying anything to harm Uber, and a $1 million consulting fee.

The judge in the Uber-Waymo case commented that “it is possible that he has been bought off by Uber.”

“I can’t trust anything you say because it has been proven wrong so many times,” he added, directing his comments at Uber’s lead attorney.

He also called the allegations “scandalous” and reprimanded Uber’s lawyers for failing to disclose the letter, which he had finally received from the Justice Department.

The judge also postponed the beginning of the trial, which had been set to begin on Dec. 4, in order to give Waymo time to gather evidence on the subject. Waymo called the allegations “significant and troubling.”

The outcome of the federal investigation may be months in the making, but the allegations could hurt Uber before it is even complete. The company is currently in the process of trying to sell its privately held stock to investors, and the turmoil has apparently resulted in a 30-percent discount on the investors’ offer. It may also impact Uber’s reputation and give competitors an opportunity to lure away passengers.

Whatever the truth of any of these shocking allegations against Uber, it seems clear that one thing they are lacking is a strong, coherent legal strategy. It is a very serious thing to be told by a judge that he cannot trust what you say.

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