Judge tells Uber to return Waymo files taken by engineer

DETROIT -- A federal judge's order that bars Uber from using technology taken by a star engineer before he left Waymo is bad news for Uber and likely will hurt the ride-hailing company's self-driving research, according to legal experts.

The ruling Monday by District Judge William Alsup in San Francisco was mainly a victory for Waymo, the autonomous car unit spun off from Google, though the judge refused to order a halt to Uber's autonomous car research as Waymo had requested, the experts said.

Waymo showed "compelling evidence" a former Waymo engineer, Anthony Levandowski, downloaded thousands of confidential files before leaving the company, the order said.

Levandowski set up his own firms, which then were sold to Uber for $680 million. Evidence showed Levandowski and Uber planned the acquisitions before Levandowski left Waymo, Alsup's order said.

"He clearly believes that Levandowski is guilty as sin and that Uber hired him, knowing this full well," said John Coffee, a Columbia University law professor who specializes in white-collar crime and corporate governance. "He is ruling that some of this information is stolen (or 'misappropriated') and in the long run that will likely have a devastating impact on Uber."

Waymo sued Uber in February, alleging the ride-hailing company is using stolen self-driving technology to build its autonomous cars. Monday's ruling prevents Uber from using Waymo's technology on a laser-navigational tool called Lidar robotic cars use to see what's around them.

"The bottom line is the evidence indicates that Uber hired Levandowski, even though it knew or should have known that he possessed over 14,000 confidential Waymo files," Alsup wrote. "At least some information from those files, if not the files themselves, has seeped into Uber's own Lidar development efforts."

Uber was ordered to return all downloaded materials to Waymo by noon May 31.

Alsup ordered Uber to remove Levandowski from any role in Lidar and told the company to stop him from copying or otherwise using the downloaded materials.

Waymo had sought to shut down Uber's autonomous car program until the dispute is settled.

But Alsup determined Waymo's patent-infringement theories were too weak to support such an order.

The judge ruled although it's hard to imagine Levandowski "plundered Waymo's vault the way he did" with no intent to use the material, Waymo still fell short of showing the trade secrets were used.

Sections of the opinion were blacked out to protect trade secrets. But the judge scolded Waymo for being "overbroad" in what it said are 121 trade secrets involved in the case. For example, the judge said Waymo can't claim the way it positions light sources in its Lidar is protected because the design uses well-known principles of physics.

Uber said in a statement Monday it's pleased the court allowed it to continue the research, including its Lidar innovations.

"We look forward to moving toward trial and continuing to demonstrate that our technology has been built independently from the ground up," the statement said.

Messages were left Monday for lawyers representing Levandowski and the companies he formed. Levandowski has invoked his Fifth Amendment right against self-incrimination in the case.

Waymo, which is part of Google parent Alphabet Inc., said it welcomed the order stopping Uber from using "stolen documents containing trade secrets."

The ruling, coupled with Alsup's order last week referring the case to federal prosecutors, signals Alsup is leaning toward Waymo based on evidence so far, said Carl Tobias, a law professor at the University of Richmond.

Alsup's order suggests there's evidence Levandowski could face federal prosecution, and there's circumstantial evidence Uber may have violated federal trade-secret theft laws, said Barbara McQuade, a former federal prosecutor in Detroit who is a law professor at the University of Michigan.

Federal law covers the person who stole a trade secret and anyone who "receives, buys or possesses it, knowing the same to have been stolen," McQuade said.

The high-stakes case will proceed to evidence exchanges between both sides and will go to trial if not settled, Tobias said. That could take months or more than a year.

The ruling will hamper Uber's ability to develop a self-driving car more quickly than Waymo, Coffee said, but it's too early to say whether Uber will be crippled by the ruling.

Levandowski formed Ottomotto, a self-driving vehicle startup, Jan. 15, 2016. Twelve days later, he resigned from Waymo without any notice. The following August, Uber bought Ottomotto and hired Levandowski to lead its self-driving car efforts.

Last week, Alsup took the rare step of referring the case to federal prosecutors for an investigation of possible criminal misconduct.

The U.S. Attorney's Office in San Francisco wouldn't confirm Monday whether it has opened an investigation.

Also Monday, Waymo confirmed it is teaming to test autonomous vehicles with Lyft, Uber's main ride-hailing competitor, in a potential challenge to Uber.