Trade secrets have been gaining on the rest of the IP family. Once an often-overlooked form of IP, the value and usage of trade secrets has been skyrocketing. They have also never been so front and center in business news as they have been recently, with the groundbreaking trade secret lawsuit between Uber and Google.
Background: In 2015, Uber hired a prominent engineer away from Google’s self-driving spinoff company, Waymo, but not before he left with thousands of confidential files related to proprietary self-driving technology.
Anthony Levandowski, the current head of Uber’s self-driving effort, worked at Google’s self-driving division, called Waymo, until early 2016 when he left to create his own startup called Otto, which focused on autonomous trucks. Uber acquired Otto, approximately six months after Levandowsky founded the company, for a reported $680 million.
In early 2017, Alphabet, Google’s parent company, filed a complaint alleging that Levandowsky stole 14,000 confidential files from Alphabet before he left.
Trade Secrets: Alphabet and Waymo allege that there are several trade secrets contained within the 14,000 files taken by Levandowsky. They are seeking $2.6 billion in damages for a single trade secret misappropriation. A staggering amount by all accounts.
To come up with such an incredible valuation for a single trade secret, Alphabet likely used either the cost approach or the income approach, both of which are mainstays in intellectual property valuation. Since the research and development of self-driving technologies is extremely expensive and requires some of the brightest engineering minds available, the cost approach might be able to capture all the R&D expenses, as well as what processes or designs Alphabet found that did not work. The income approach, or the relief from royalty approach which is a hybrid valuation methodology, could also be employed to accurately assess the value of Alphabet’s trade secrets. Since the value of the self-driving vehicle market is speculated to be staggering in the coming decades, the income approach might be the better approach to capture the present value of the potential future income that could be derived from the Alphabet trade secrets.
CONSOR has been assisting clients with their intellectual property valuation, licensing, and other monetization needs for over 25 years. Whether it is for transactional or litigation purposes, CONSOR has had a successful track record in valuing and defending our clients’ intellectual property. Simply let us know how we can best serve you. To discuss your IP valuation and monetization needs, contact CONSOR at info@consor.com or (858) 454-9091.