Waymo’s $1.86B Damages Estimate Imperiled By Judge

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Updated 12 p.m. 11/6/17 with material from the unsealed decision. 

SAN FRANCISCO —The judge presiding over Waymo’s driverless car trade secrets case against Uber has excluded a Waymo expert who pegged damages at $1.859 billion, in what appears to be a significant blow to the Alphabet subsidiary’s case.

U.S. District Judge William Alsup of the Northern District of California late Thursday night issued an order excluding Waymo expert Michael Wagner.

“Wagner offered opinions labeled as both unjust enrichment and reasonable royalty,” wrote Alsup in an order which was initially filed under seal, but made public early Monday morning. “Other than grade-school arithmetic, however, he did not apply any coherent principle, methodology, theory, or technique, much less one possessing any discernible indicia of reliability.”

The order casts doubt on the ability of Waymo to quantify the economic harm from Uber’s alleged theft of its trade secrets just a month before trial is set to begin.

Also Thursday night, Judge Alsup tossed out one of the nine alleged trade secrets being pursued by Waymo dealing with lenses and made critical statements about the analysis of another of the company’s experts, Stanford electrical engineering professor Lambertus Hesselink.

Pointedly, Alsup called Hesselink’s decision to focus on one similarity between two lenses “a trick—smoke and mirrors.” His ruling kicked out Waymo “Trade Secret Number 96.”

Alsup also granted summary judgment in favor of Otto Trucking, a holding company majority owned by former Waymo engineer Anthony Levandowski, saying it could not be held liable for any alleged trade secret theft by Uber and would not be part of the trial.

Levandowski, who went to Uber but was later fired, allegedly took some 14,000 files from Waymo. He also started the self-driving car startup Ottomotto, which Uber acquired.

“Waymo’s case continues to shrink,” Uber said in a statement Friday morning reacting to the ruling. “After dropping their patent claims, this week Waymo lost one of the trade secrets they claimed was most important, had their damages expert excluded, and saw an entire defendant removed from the case—and all this before the trial has even started.”

Waymo, which is represented by Quinn Emanuel Urquhart & Sullivan in the litigation, stressed in a statement that it continues to possess hard evidence that Uber is using its trade secrets, and downplayed the effect of Otto Trucking being removed from the case for trial.

“Our case has always been principally against Uber and Ottomotto, and we look forward to presenting our evidence on multiple trade secrets at trial,” the company said. “We are also pleased that the court expressly recognized the possibility of including Otto Trucking in any future injunction and/or potential subsequent trial.”

Trial in the case is set to start on Dec. 4, although Alsup has held open the possibility of a second trial that would focus on newly alleged software-related trade secrets.

Uber—represented by Morrison & Foerster, Boies Schiller Flexner and Susman Godfrey—had argued Wagner’s damages theory is one based on future profits and thus is unreliable. In a September filing, its lawyers wrote that “forecasting profits in the nascent autonomous vehicle industry that has not yet been commercialized is inherently speculative.”