Earlier this month, data-analytics group HouseCanary obtained one of the largest trade secret verdicts in US history for $706 Million. The verdict was handed down from a Texas jury based on a lawsuit filed in state court in San Antonio (Bexar County). HouseCanary’s verdict was against Amrock, Inc. d/b/a “Title Source,” which is one of the largest title insurance valuation firms in the US. The most ironic part about this lawsuit is that HouseCanary started off as a defendant and won its nearly three-quarters of a billion dollars based on its counterclaim.
The two companies met when Title Source hired HouseCanary to help with the design of its real estate appraisal software that included an automated valuation model to predict property values. HouseCanary designed software, which greatly improved the automation of this process, and the two companies had an NDA and license agreement in place. The NDA was to protect the disclosure and reverse engineering of HouseCanary’s software, and the license agreement provided for a $5 million/year fee from Title Source to use HouseCanary’s software. The Parties ceased dealings with each other after about 18 months, and Title Source proceeded to “develop” its own software.
After the Parties’ relationship deteriorated, Title Source filed suit against HouseCanary alleging nonperformance under the license agreement and breach of the NDA based on HouseCanary’s alleged disclosure of the confidential licensing relationship. HouseCanary then counterclaimed for breach of contract, fraud, and misappropriation of trade secrets. Discovery through the case revealed that Title Source had downloaded HouseCanary proprietary data and improperly used this data to reverse engineer HouseCanary’s automation software.
After completion of a seven week trial where the Parties split the time for their claims, the jury rejected all of Title Source’s claims against HouseCanary. The jury also came back and awardedHouseCanary $201.6 million for trade secret misappropriation, $403.2 million as punitive damages for misappropriation, $33.8m for fraud, and $67.6 million as punitive damages for the fraud.