PhantomALERT: Waze Stole Our Database And Sold It To Google For $1 Billion

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Traffic violation-avoidance app maker PhantomALERT has sued Waze/Google for copyright violations and related claims. The company contends that Waze stole its points of interest (POI) database after partnership negotiations broke down between the two companies.

Google is named in the suit only as the legal owner of and successor to Waze. No specific Google wrongdoing is alleged. The plaintiff is asking for, among other things, compensatory and punitive damages.

Here are the critical facts according to the complaint (embedded below):

Only July 30, 2102, Noam Bardin, the CEO of Waze, sent Yoseph Seyoum, the CEO of PhantomALERT, an email with a proposal to cooperate in the operation of their respective GPS-mapping companies.

Later that same day, Bardin and Seyoum spoke by telephone. During the call, Bardin proposed that Waze and PhantomALERT exchange their respective Points of Interest databases. Because Waze did not appear to have substantial data to share, Seyoum declined Bardin’s offer.

After Seyoum rejected Bardin’s offer to exchange databases …  Waze copied the PhantomALERT Points of Interest database in its entirety in or around late 2012 without any authorization or consent.

The proof of Waze’s alleged copying of the PhantomALERT database is the appearance of fictitious POIs in the Waze database. PhantomALERT says it deliberately placed fake places in its database as a tactic to detect unauthorized copying:

Among other methods, PhantomALERT determined that Waze had copied its Points of Interest database by observing the presence of fictitious Points of Interest in the Waze application, which PhantomALERT had seeded into its own database for the purpose of detecting copying.

In the absence of the $1 billion sale of Waze to Google, this would be a much more difficult case for the plaintiff regarding damages. But the $1 billion acquisition price places a high value on Waze, if not its data. The defendants might argue that it’s not the data but the company’s audience and crowdsourcing functionality that commanded the high price.

Indeed, Google’s attorneys will probably argue that its own POI data was far superior to Waze’s and that it didn’t need Waze’s data at all. I’m not sure such an argument will be credible before a jury (assuming the case gets that far).

Still, if the facts alleged in the complaint can be proven — that Waze did talk to PhantomALERT about a partnership, that negotiations broke down and that Waze subsequently copied the POI database — this case is a candidate for punitive damages. Given that Google has deep pockets, it makes such an award more probable than if PhantomALERT were simply suing a startup with no revenue.

The specter of punitive damages also makes a settlement much more likely.

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