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Texas judge upholds large jury award in trade-secret case

News and Notes Focused on the 3 Public Faces of IP Law

  • Brand Image Protection - Trademark Law
  • Visual Image Protection - Copyright Law
  • Personal Image Protection - Right of Publicity Law

The Image Protection Law blog has been created in order to share stories and information on the legal aspects of: 1) the marketplace reputation of a company or product captured in its trademark, 2) published or publicly-displayed artwork, photography, and any created visual design, and 3) use of a person's photograph or likeness for product promotion or other commercial purposes.

The "IP3" share at least one thing in common: Image is everything. In these posts let's look at what that means in the realm of intellectual property in the news, but let's also be prepared to explore if there's something more beyond "everything." Don't forget, the intellectual in "intellectual property" doesn't mean smart or brainy, although by nature true creators often are. The word is used to refer to any creation, i.e., a "product of the mind." While this blog will be regularly updated, you are encouraged to share your thoughts on these posts.

Keeping trade secrets just that -- secret -- can make or break the success of a company. We have written in this space extensively about ways to keep a business's trade secrets safely away from the public or from competitors. One of those is to write ironclad nondisclosure provisions in contracts with other businesses when the commercial relationship could reveal the details of internal processes to those business partners. 

Last month, Texas state-court judge David Canales refused to reduce or throw out a March 2018 jury award of almost $740 million for alleged trade-secret theft based on fraud in a case involving two players in the real-estate appraisal and valuation marketplace, according to HousingWire.

Allegations of wrongdoing 

San Francisco-based HouseCanary asserted that Amrock (an affiliate of Quicken Loans and formerly Title Source), after the parties signed an agreement for HouseCanary to share appraisal data with Title Source, wrongly misappropriated and replicated the plaintiff's trade secrets involving proprietary formulas, products and data, reports HousingWire. HouseCanary also claimed that Title Source did not pay for work under the contract. 

For its part, Title Source reportedly claimed that the products HouseCanary provided under the contract were useless, that HouseCanary was in breach of contract and that Title Source had created its technology without access to or use of HouseCanary secrets. 

Jury verdict 

According to Crain's Detroit Business and HousingWire, the Bexar County jury awarded HouseCanary: 

  • Over $235 million in compensatory damages for fraud and misappropriation of trade secrets
  • Punitive damages (to punish and make the defendant an example) of $471.4 million
  • Interest of almost $29 million
  • Legal fees of $4.5 million 

Now that the judge has refused to reduce or throw out the verdict, Amrock vows to vigorously oppose it either on appeal or in a new trial. Crain's reports that the methods HouseCanary claims are trade secrets are already "known methods in the industry." 

The appeal of this large award will be watched closely by others in the housing industry as well as by intellectual property professionals.

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