A lawsuit seeking $1 billion in damages based on allegations that the rideshare company was founded based on stolen trade secrets can now move forward after a jury in San Francisco Superior Court decided last month that the plaintiff’s claim was timely filed. The complaint alleges that former Uber CEO Travis Kalanick and others misappropriated Plaintiff Kevin Halpern’s idea for a startup called Celluride Wireless Inc. – a peer-to-peer service enabling passengers to summon drivers and track them with their cell phones. Halpern claims that he disclosed information about his idea to Kalanick under the promise of secrecy around 2006. The Uber app was launched four years later.
In defense, Kalanick claims that Uber Chairman Garrett Camp, also an individual defendant in the lawsuit, came up with the idea that later became Uber when the two were in Paris. According to Kalanick and Camp, Camp’s initial concept was for a limo timeshare service.
The jury determined that despite an investigation in 2010, Halpern did not learn at that time that Kalanick was connected with Uber, and therefore his lawsuit in 2015 was filed within the three-year statute of limitations after learning of the alleged misappropriation. Now that the procedural question of the timeliness of Halpern’s suit is resolved, the case will move forward on the merits. In addition to misappropriation of trade secrets, Halpern’s second amended complaint includes causes of action for breach of oral and implied contract, breach of covenant of good faith and fair dealing, and quantum meruit. Halpern seeks an injunction against Uber’s continued use of their allegedly misappropriated trade secrets, as well as disgorgement of Uber’s alleged unjust enrichment and exemplary damages. The court has ordered mediation for the parties and, if mediation fails, to proceed through discovery and litigation on the merits of the claims.
This case serves as a reminder that the statute of limitations for trade secret misappropriation in California begins upon discovery, or when the claimant should have discovered it “by the exercise of reasonable diligence” (Cal. Civ. Code § 3426.6) leaving companies potentially exposed to misappropriation suits long after inventions are in public use.