Uber should have given court an ex-employee's letter
about 'fraud and theft' in Waymo case
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[December 16, 2017]
By Heather Somerville
SAN FRANCISCO (Reuters) - Ride hailing
company Uber was obligated to turn over to a U.S. federal judge a letter
from a former employee that told of the company's "fraud and theft" and
mentioned evidence of stolen trade secrets nailed "like a scalp" to the
wall, a court official said Friday.
Special master, John Cooper, assigned to a lawsuit against Uber
Technologies Inc [UBER.UL] by Alphabet Inc's <GOOGL.O> self-driving car
unit, Waymo, released a report on Friday stating the company should have
produced the letter and was wrong in keeping it from the court.
The letter, from former Uber security analyst Richard Jacobs alleging
Uber engaged in illegal and unethical competitive tactics and had stolen
trade secrets, is at the heart of Waymo's lawsuit against Uber.
The letter was sent to Uber's in-house lawyer in May and shared with
executives and board members, who could easily access it, special master
Cooper said in his report.
"This needle was in Uber's hands the whole time," he said.
Cooper's determination marks another setback for Uber in a case in which
the judge has blamed Uber for withholding evidence and masterminding a
U.S. District Judge William Alsup will determine what, if any,
consequences Uber faces for not turning over the letter.
The 37-page letter from Jacobs was released publicly for the first time
Friday, partially redacted, although its contents had been discussed in
detail during court testimony last month.
Because Uber had not disclosed it, the letter turned up just last month
when the U.S. Department of Justice notified Alsup about it. The Justice
Department has opened a criminal investigation into the matter.
Waymo sued Uber in February, alleging it had stolen trade secrets from
Waymo's self-driving car designs, and estimates damages in the case at
$1.9 billion. Uber has said no Waymo designs have been used in its cars
and rejects the financial damages claim.
In the letter, written by Jacobs' lawyer, the ex-Uber employee said
Uber's security team had a unit that "exists expressly for the purpose
of acquiring trade secrets, codebase, and competitive intelligence," and
a second unit that "frequently engages in fraud and theft."
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The Uber logo is seen on a screen in Singapore August 4, 2017.
REUTERS/Thomas White/File Picture
His letter says that Uber stole trade secrets from Waymo, but in court testimony
last month he recanted that statement.
Jacobs' letter also describes surveillance operations in which Uber employees
bugged meetings with transportation regulators and recorded executives of rival
companies, and says that former Uber CEO Travis Kalanick directed these
In a statement on Friday, Uber said it has not substantiated all of the claims
in Jacobs' letter, but "our new leadership has made clear that going forward we
will compete honestly and fairly, on the strength of our ideas and technology."
Dara Khosrowshahi replaced Kalanick as CEO in August, and has been critical of
Uber's behavior under its old leader.
Jacobs named Mat Henley, who is on medical leave from Uber, Nick Gicinto, a
manager on the security team, as instrumental in Uber's clandestine
intelligence-gathering operation. Security chief Joe Sullivan, and legal
director Craig Clark, who were both fired last month for their role in
concealing a massive data breach, were also involved, the letter said.
Sullivan said in a statement on Friday his team "acted ethically" and an
attorney for Clark said has he "acted appropriately at all times."
Matthew Umhofer, an attorney for Henley, Gicinto and other members of Uber,
said: "Jacobs' letter is nothing more than character assassination for cash."
Jacobs was forced to resign in April after a demotion, and sent the letter the
following month. He struck a deal with for Uber a $7.5 million settlement, and
Jacobs continues to work for Uber as a consultant.
(Additional reporting by Joseph Menn and Dan Levine in San Francisco; editing by
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