Waymo LLC — formerly Google’s self-driving car program and currently a stand-alone company owned by Google’s parent company — is now in fierce competition with Uber to develop and capitalize on driverless technology. This battle intensified on February 23, 2017, when Waymo filed a lawsuit against Uber Technologies, Inc., Ottomotto LLC, and Otto Trucking LLC.

Trade Secret Claims. Waymo’s lawsuit focuses on the actions of one former employee, Anthony Levandowski, who was a manager at Waymo and now leads a parallel self-driving car program for Uber. Mr. Levandowski resigned from Waymo in January 2016, but Waymo alleges that in December 2015 he downloaded more than 14,000 highly confidential business files, which included information on Waymo’s new and unique radar system. To add to the suspicious downloading activity, Waymo alleges that Mr. Levandowski met with Uber executives shortly after acquiring the files.

Waymo’s lawsuit further alleges that Mr. Levandowski went to great lengths to conceal the downloading. According to Waymo, he attached an external hard drive to his laptop and installed a new operating system “to erase any forensic fingerprints that would show” that he copied Waymo’s confidential information. Waymo also alleges that Mr. Lewandowski set up a competing company prior to his departure that later became Otto, and that he told coworkers of his plan. When Mr. Lewandowski resigned, Waymo alleges, other employees joined his new venture and took with them confidential supplier lists, manufacturing details, and highly technical information.

Within months after Mr. Levandowski started his competing business, Uber purchased it for $680 million. Waymo asserts that Uber’s self-driving car program had stalled before its acquisition of Otto, and that shortly after the acquisition, Uber represented to regulatory authorities that it was using an in-house custom built radar system. A Waymo employee was inadvertently copied on an email to Uber employees from a vendor of one of its radar system components. The email included an attachment of an Otto radar system that was similar to Waymo’s design. Waymo’s lawsuit followed.

Uber has not had an opportunity to respond to the allegations, but Waymo’s complaint paints a compelling story that we will continue to monitor and report on.

Take Away. It is no surprise that Uber wants to be on the cutting edge of self-driving car technology: a future with self-driving cars poses a significant challenge to Uber’s current business model. But this case stands as a cautionary tale that competitors — both big and small — can rely on state and federal laws to protect confidential and proprietary information from being exploited by their competitors.

Employers who rely on confidential information to compete should take steps, like Waymo alleges it took, to protect proprietary information. Laws that prohibit trade secrets theft are often unavailable when employers fail to take reasonable measures to protect their secrecy. Some fairly easy steps can be taken, such as restricting access to confidential information accessible to only high-level employees on a “need to know” basis and requiring and enforcing confidentiality and non-compete agreements. On the other hand, employers planning to hire an employee of a competitor (or acquire a business owned by a competitor’s former employee) should be highly vigilant about enforceable non-compete agreements and potential trade secret theft.