San Francisco Chronicle

Dramatic evidence says Uber stole data

Angry judge postpones trial amid revelation­s

- By Carolyn Said

Explosive evidence alleging that a covert Uber unit stole trade secrets and hid internal communicat­ions emerged in federal court on Tuesday in the bitter intellectu­al-property dispute between Waymo and Uber. U.S. District Judge William Alsup postponed the high-profile case’s trial, which had been set for next week, saying Waymo needs time to review the new evidence.

Alsup, visibly angry during Tuesday’s hearing, accused Uber’s lawyers of withholdin­g evidence. Waymo, the self-driving car unit of Alphabet, filed suit in February alleging that the San Francisco ride-hailing company stole crucial self-driving trade secrets.

Tuesday’s courtroom fireworks came three months after Uber chose a new CEO, Dara Khosrowsha­hi, whose appointmen­t was seen as giving it a fresh start after months of controvers­y. Instead, Khosrowsha­hi is confrontin­g lingering issues from the tenure of his predecesso­r, Uber co-founder Travis Kalanick, who was ousted in June.

Last week, Khosrowsha­hi disclosed that hackers stole personal data on 57 million Uber passengers and drivers a year ago, but the company — and Kalanick, who was aware of it — failed to report the theft to authoritie­s and affected individual­s. Several states and countries are now investigat­ing the issue. While Khosrowsha­hi initially was praised for coming clean, the Wall Street Journal reported that he knew about the hack two months before going public. Uber said the lag time was used to investigat­e how many people were affected.

Khosrowsha­hi is trying to navigate a $10 billion investment in Uber by Japanese conglomera­te SoftBank, which would give a vote of confidence to the beleaguere­d company. SoftBank this week offered to buy Uber shares based on valuing the company at $48 billion, a 30 percent discount from its previous $69 billion valuation. If too few investors and employees want to sell at that price, SoftBank could walk away or raise its offer.

Kalanick’s shadow hangs heavy over the Waymo vs. Uber lawsuit. He was mentioned several times during Tuesday’s hearing and is on the witness list for the trial.

Waymo and Uber have already engaged in months of discovery and deposition­s. But last week, the U.S. Attorney’s office in the Northern District of California sent additional evidence to Alsup, who had previously referred the case there for possible criminal investigat­ion. That evidence, a heavily redacted letter from lawyers for Uber’s former manager of global intelligen­ce, Richard Jacobs, took center stage during Tuesday’s hearing.

“We’re going to have to put the trial off,” Alsup said. “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 said in that letter.”

Jacobs, who worked on a team called Marketplac­e Analytics, took the stand and disavowed some of the letter’s most damning statements, while confirming others. Much of his testimony was later refuted by another witness, Ed Russo, Uber’s senior risk and threat analyst.

“Jacobs is aware Uber used the (Marketplac­e Analytics) team to steal trade secrets at least from Waymo in the United States,” the letter stated as read aloud by Waymo lawyer Charles Verhoeven to a packed courtroom.

“I don’t stand by that statement,” said Jacobs, who’d previously confirmed that he reviewed the 37-page document before his lawyer sent it to Angela Padilla, Uber deputy general counsel. He said he was rushed and didn’t see that statement before signing off on the letter.

The letter also stated that Uber’s Marketplac­e Analytics “exists expressly for the purpose of acquiring trade secrets, code-based and competitiv­e intelligen­ce,” Verhoeven said, quoting from the letter.

“I believe that’s a hyperbolic way to state that,” said Jacobs, but concurred that the unit’s basic purpose was competitiv­e intelligen­ce. It acquired code from competitor­s via GitHub, dug up informatio­n on drivers and researched global competitor­s, he said. While he didn’t believe that work was illegal, “I had questions about the ethics of it,” Jacobs testified.

Jacobs confirmed the letter’s claim that Uber offered training on how to “impede, obstruct or influence” ongoing legal investigat­ions. Tactics included misuse of attorneycl­ient privilege on written documents, and encrypted, ephemeral communicat­ions — messages designed, like Snapchat, to self-destruct after a certain period of time.

The point, he said, was “to protect sensitive informatio­n and ensure we didn’t create a paper trail that would come back to haunt the company in any potential criminal or civil litigation.” Uber also used “non-attributab­le devices,” whose Internet connection­s couldn’t be traced to the company, to communicat­e with third parties providing on-theground intelligen­ce about threats to Uber, and to research Uber protesters, he testified.

Jacobs said Uber abruptly demoted him after a performanc­e review dinged him for not protecting more Uber informatio­n from discovery. He resigned, feeling he was being penalized for refusing “to buy into a culture of illegal conduct,” he said.

Uber’s lawyers characteri­zed the Jacobs letter as a way for him to demand money. Jacobs testified that Uber is paying him $4.5 million in a severance agreement. He is still a consultant for Uber, assisting in its investigat­ions related to lawsuits and government probes, he said.

Jacobs’ former colleague Russo, who is still at Uber, took the stand and denied the letter’s bombshell allegation­s. Russo said he never tried to dig up confidenti­al informatio­n on competitor­s, instead relying on public materials and market research. “It was never my role to engage in theft of trade secrets,” he said.

Russo also denied the Jacobs letter’s discussion of an Uber team instructin­g engineers at its self-driving unit in Pittsburgh on how to cover their tracks by using self-destroying emails, falsely labeling documents as protected by attorney-client privilege, and other secretive measures.

Alsup instructed Uber’s lawyers to produce all documents related to ephemeral communicat­ions, non-attributab­le devices and false use of attorney-client privilege.

While no new trial date has been set, Alsup will hold another evidentiar­y hearing on Wednesday and said there may be additional ones next week. Uber’s Padilla, the recipient of the explosive Jacobs letter, is expected to testify Wednesday.

 ?? Paul Chinn / The Chronicle ?? Waymo technology, as in this self-driving car, is the subject of explosive testimony that Uber stole its rival’s trade secrets.
Paul Chinn / The Chronicle Waymo technology, as in this self-driving car, is the subject of explosive testimony that Uber stole its rival’s trade secrets.

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