Almost every company has some proprietary information that acts as a secret of their success. This information is always kept confidential from the competitors. This information is called trade secrets. Theft of the trade secrets is known as “Economic Espionage”. In the present study, we will first learn the concept of “Economic Espionage” and different laws associated with it. The “Economic Espionage” can be extremely difficult to prove in the court of law. However, in the present study, we will discuss how the Economic Espionage leads a person to files for bankruptcy.
Trade secret, a type of intellectual property plays a significant role in the growth of the business. A trade secret may consist of technical or commercial information that is utilized in business. It may be any valuable business information, computer software, a manufacturing apparatus or process, or a formula for a chemical compound. It offers an advantage over competitors who are not aware of such information. This information is protected under trade secret laws. The Theft of Trade Secrets is considered as a Federal Crime. It is also known as economic espionage or industrial espionage.
The Economic Espionage Act
The Economic Espionage Act (EEA) is used as a weapon to reduce corporate espionage and the loss of valuable corporate information. It is majorly used in the United States and private companies and may result in a big amount of fine of up to $5,000,000.for an individual (up to $5 million for corporations), imprisonment up to ten years, or both. The EEA is considered as a powerful tool to protect the trade secrets of an organization. Apart from EEA, there are numerous laws that are utilized to prevent the theft of trade secrets.
The case study
This case study is related to the theft of trade secrets of Google by Uber. The objective of this case study to portray the power of laws made to protect Economic Espionage.
Anthony Levandowski was a star engineer employed by Google. He worked in Google on the self-driving car project. He was considered one of the brightest and best-known employees of Google. He has been working on Google autonomous projects since 2004 and developed a driverless motorcycle. In 2008, he developed a “self-driving Toyota Prius” while working on Google’s Street View maps. In 2009, Google has initiated its self-driving car project. Levandowski was one of the members of the team who was working on the self-driving car project. Suddenly, In January 2016, Levandowski left Google and became an entrepreneur. He had opened his start-up, Otto. It was a self-driving technology company. Otto was acquired by the Uber in August 2016 at the estimated cost of $680 million.
Waymo versus Uber
In 2017, Waymo which is Google’s self-driving car unit sued Uber for patent infringement stealing the information related to self-driving cars. Waymo also sued Anthony Levandowski for stealing trade secrets of Google. Uber and Anthony Levandowski pleaded guilty for stealing and using the trade secrets of Google. It was proved in court that before leaving Google, Levandowski had downloaded multiple testing documentation, manufacturing, engineering, business, and highly confidential files related to self-driving car technology. It was also proved that Uber was using Google’s trade secrets. As a result, the court ordered Mr. Levandowski to pay $179 million to Google. The court also ordered Uber to pay $245 million to Waymo.
In 2018, the lawsuit settled and Uber agreed to pay $245 million to Waymo. However, Mr. Levandowski still has to pay $179 million. It leads him to file for chapter 11 bankruptcy protection and he claimed that he had left with the amount less than $100 million.
Trade secrets are very important for the growth of a company. The protection of trade secrets is very essential as the theft of trade secrets can destroy a company. The laws related to the theft of trade secrets act as a recovery tool for trade secret theft. Generally, the trade secret laws are not considered as a powerful tool to protect Economic Espionage because it is very hard to prove the theft of trade secrets in the court. But from the case study of Google versus Uber, we have learned that the trade secrets laws are very powerful.
Authored By: Garima Sharma, Research Analyst, Operations Team