Trade secrets fueling rise in autonomous vehicle disputes

Nearly every major player in the auto manufacturing and ride-sharing industries, as well as tech giants in the ridesharing space and beyond, are racing to bring the first fully autonomous vehicle, or "AV," to market. In the simplest terms, autonomous vehicles are cars or trucks that combine sensors and software to safely operate without human intervention. The global AV market is projected to be valued as high as $50 billion in 2019, with future projections in decades to come soaring to the trillions. Given the value at stake, companies must diligently protect their intellectual property from competitors.

Also referred to as "self-driving" or "driverless" technology, AV systems primarily rely on machine learning to teach the vehicles how to respond to new or unexpected scenarios by entering tremendous amounts of exemplary data into the systems' algorithms. In order to have "eyes" on the road, most AVs use some combination of radar, cameras, and LIDAR ("light detection and ranging") to create and maintain an internal map of immediate surroundings. Software then processes the information received from these sensors, plots a route, and sends instructions to the vehicle's "actuators", which control acceleration, braking, and steering.

The machine learning that is core to AV industry technology brings with it a host of challenging and, in many instances, unprecedented, intellectual property issues. Patenting can be a robust means of protection, particularly for AV hardware components, but seeking patent protection for AV software has limitations. For one, the patent-eligibility for software patents more broadly remains unsettled. Moreover, the software core to AV systems is in constant flux and development. As a result, AV companies often rely on copyright and trade secret protection for the algorithms and code core to their products.

In turn, there has been an uptick in trade secret litigation between AV competitors. WeRide Corp., et al., v. Kun Huang, et al., 5:18-cv-07233-EJD (N.D. Cal. Nov. 29, 2018) is a good example. In WeRide, AV startup WeRide brought a misappropriation case against two former employees, CEO, Jin Wang, and director of hardware, Kun Huang, together with the competitor that Huang joined, Zong Zhi Xing Technology Co. Ltd. (ZZX). (WeRide also sued AllRide.AI, Inc., a purportedly related entity of ZZX.)

WeRide's complaint alleges that in January 2018, its board voted to remove Wang as CEO and, following his termination, Wang founded a competing AV startup, defendant ZZX. WeRide contends that following Wang's dismissal, in August 2018, Huang also left WeRide to join ZZX as its vice president of technology. Prior to his departure, Huang had been a valued WeRide employee, with the company publicly crediting him for its success in completing its first public road test in record time.

Along with its complaint, WeRide sought a preliminary injunction and expedited discovery. WeRide alleged that Huang made copies of over one thousand company proprietary files comprising critical trade secret information from his company-issued computer while he was still a WeRide employee. According to WeRide, Huang attempted to cover his tracks by deleting numerous files from his computer and clearing the web browsing history. He also erased the hard drive of a second company-issued computer and reinstalled its operating system before returning the two computers to WeRide. Then -- just 10 weeks after leaving WeRide -- Huang appeared at a recruiting event in China where ZZX presented a video of its test car performing "advanced capabilities," including detecting a pedestrian about to cross the street at a cross walk and changing lanes to pass a slower vehicle.

Judge Edward Davila in the Northern District of California granted in part WeRide's motion by ordering a preliminary injunction against Huang, ZZX and AllRide, as well as expedited discovery. The court based its decision on Huang's senior role in the development of ZZX's AV technology and the content of ZZX's promotional video, which indicated "implausibly fast development" in the 10 weeks Huang had been working for ZZX. Judge Davila was also swayed by WeRide's expert's testimony in which he opined that ZZX's positioning of its radar component on the front center of the vehicle's roof, like WeRide, rather than on the front bumper or rear-view mirror like most competitors, was "consistent with the use of WeRide's source code." The court, however, denied the preliminary injunction as to Wang, finding there was insufficient basis to believe that Wang works for ZZX.

As the WeRide preliminary injunction motion practice shows, trade secret protection can be vital to AV technology IP protection. WeRide's prompt action to seek protection of its trade secrets enabled it to obtain a preliminary injunction and access to expedited discovery. While other forms of IP protection can and should be considered, trade secret protection is a vital component of any AV technology protection strategy for companies aiming to be first across the mass-market finish line. And with AV employee turnover high and trillions of dollars at stake, expect to see many more trade secret disputes on the horizon.

Amy Van Zant is an IP partner in Orrick's Silicon Valley office. Clients count on Amy to move their business forward by litigating complex patent suits, advising on multi-faceted IP strategies, and providing comprehensive counseling on trade secrets and other IP issues.