FILE PHOTO: Waymo unveils a self-driving Chrysler Pacifica minivan during the North American International Auto Show in Detroit, Michigan, U.S., January 8, 2017. REUTERS/Brendan McDermid/File Photo
Uber Technologies Inc will pay $245 million worth of its own shares to Alphabet Inc's Waymo self-driving vehicle unit to settle a legal dispute over trade secrets, allowing Uber's chief executive to move past one of the company's most bruising public controversies.
The settlement announcement on Friday brought an abrupt halt to the captivating case just before the fifth day of testimony was to begin at a jury trial in federal court in San Francisco.
In a lawsuit filed last year, Waymo said that one of its former engineers who became chief of Uber's self-driving car project took with him thousands of confidential documents.
The lawsuit cost Uber precious time in its self-driving car ambition, which is a key to its long-term profitability. Uber fired its self-driving chief after Waymo sued, and it is well behind on its plans to deploy fleets of autonomous cars in one of the most lucrative races in Silicon Valley.
The settlement allows Uber's chief executive officer, Dara Khosrowshahi, to put another scandal behind the company and move ahead with development of self-driving technology, following the tumultuous leadership by former CEO Travis Kalanick, who testified at the trial on Tuesday and Wednesday.
As part of the deal, Waymo gets a 0.34% stake in Uber, worth about $245 million based on Uber's current $72 billion valuation, a Waymo representative said. The settlement includes an agreement to ensure that Waymo confidential information is not being incorporated into Uber technology, which Waymo has said was its main goal in bringing the lawsuit.
In settlement talks last year, Waymo had sought at least $1 billion from Uber, and wanted an independent monitor to ensure that Uber would not use Waymo technology in the future, Reuters reported. Waymo also asked for an apology. Uber rejected those terms as non-starters.
Waymo had agreed earlier this week to a settlement proposal valued at $500 million, and Khosrowshahi brought the proposal to the Uber board of directors, offering his support. But Uber's board rejected those terms on Tuesday, two sources familiar with the discussions said, sending Khosrowshahi and chief legal officer Tony West back to renegotiate.
In the interim, the famously pugnacious Kalanick testified in court, maintaining a calm demeanour as he answered questions about Uber's soured relationship with Alphabet and his admiration for Anthony Levandowski, the self-driving-car engineer whose actions led to the lawsuit.
After four days of testimony, Waymo had presented little public evidence that Uber used Waymo's trade secrets. By late Thursday, Waymo agreed to the $245 million deal, one of the sources said. In a statement on Friday, Khosrowshahi expressed "regret" for Uber's actions. "While we do not believe that any trade secrets made their way from Waymo to Uber, nor do we believe that Uber has used any of Waymo's proprietary information in its self-driving technology, we are taking steps with Waymo to ensure our Lidar and software represents just our good work," Khosrowshahi said in a statement. Lidar is a light-based sensor crucial to autonomous driving. Elizabeth Rowe, a professor at the University of Florida Levin College of Law, analysed about 150 trade secret verdicts through 2014 and said $245 million would rank as the second highest. Given that landscape, along with the fact that Alphabet CEO Larry Page could have had to testify next week, the settlement makes sense for Waymo, she said.
"Their risks would have gone up on many levels," Rowe said. Waymo's lawsuit said that Levandowski had downloaded more than 14,000 confidential files containing designs for autonomous vehicles in December 2015 before he went on to work at Uber in 2016.