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Uber accused of stealing trade secrets

A lawsuit against the ride-hailing company alleges the original technology used for its app was ripped off from another fledgling startup.

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Attorney Christopher Dolan is representing entrepreneur Kevin Halpern in his lawsuit against Uber for allegedly stealing trade secrets. Dara Kerr/CNET

Uber, which is facing lawsuits from drivers, passengers and regulators over its ride-hailing service, is now being accused of stealing trade secrets from a man who says he invented the technology behind the app.

Entrepreneur Kevin Halpern says he founded a company called Celluride Wireless in 2002 that used mobile technology to match drivers with passengers. Halpern, who is based in California, claims he shared Celluride's trade secrets with Uber co-founder and CEO Travis Kalanick over a period of time beginning in 2006 and that Kalanick allegedly stole Halpern's technology and cut him out to launch Uber.

Halpern "spent seven years developing technology that he claims is the basis of the Uber app," Halpern's attorney Christopher Dolan said during a press conference at his law office in San Francisco on Thursday. "He has been left out of the company."

An Uber spokeswoman said, "These claims are completely baseless. We will vigorously defend against them."

Uber, founded in 2009, provides a mobile app that lets passengers hail a ride from their smartphone. The company began operations in San Francisco and is now the world's largest ride-hailing service, operating in more than 250 cities in 57 countries.

It's also the second-highest-valued venture-backed company in the world with a valuation of $41.2 billion. No. 1 is Chinese smartphone maker Xiaomi, with a $46 billion valuation, according to The Wall Street Journal. Last week rumors floated that Uber may soon top Xiaomi with reported new funding coming in that could value it at $50 billion.

In addition to suing Uber, Halpern also filed claims against Kalanick, Uber co-founder Garrett Camp and Uber's early venture capital investors -- Benchmark Capital, Founder Collective and First Round Capital. The suit was filed Thursday in San Francisco Superior Court. The three venture capital firms did not respond to requests for comment.

Travis Kalanick, co-founder and CEO of Uber, is being accused of stealing Kevin Halpern's technology and cutting him out to launch Uber. Boston Globe via Getty Images

Lawsuits against deep-pocketed tech companies are not uncommon in Silicon Valley, with people claiming their technology was copied or misappropriated or even that patents were violated. It's happened to Facebook, with Apple's iPhone, and to Google for many of its products.

Halpern claims that he worked on the architecture and business plan for Celluride Wireless from 2002 to 2008. He says he built a beta test and model for the ride-hailing service but that he did not file for patents or copyrights. His attorney said Halpern has a sealed time capsule that contains his original plans, which is locked in a safe.

Halpern says he trusted Kalanick with the technology and that they only had a verbal confidentiality agreement. The two reportedly met several times to talk about Celluride's technology, funding and their potential business relationship, according to court documents filed by Dolan. Before bringing the lawsuit against Uber today, Halpern says he tried to negotiate with the company to resolve the matter privately last fall.

"This is an important action by Mr. Halpern," Dolan said. "It's not one he took lightly."

Halpern filed a similar suit against serial entrepreneur Anu Shukla in 2009. In that suit, Halpern alleged to be co-founder of a company Shukla founded. That case was dismissed in 2014 and Dolan claims the matter was resolved between the two parties.

Dozens of lawsuits have been filed against Uber in the past few years. Drivers have brought claims alleging the ride-hailing service illegally classifies them as contractors rather then employees, which means Uber doesn't have to pay for workers' compensation or health insurance. Passengers have sued over reported assaults carried out by Uber drivers who allegedly didn't have proper background checks.

And government regulators in the US, Germany, Spain, France and other countries have sued Uber for claims including allegedly misleading passengers, unfair competition with taxis and operating illegally.

Halpern's complaint against Uber says he suffered damages for an undetermined amount that is more than $1 billion. "He wishes to demonstrate that young entrepreneurs can stand up to the biggest corporations when they feel they've been harmed," Dolan said.

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