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HouseCanary, a startup provider of analytical services, recently received the biggest IP judgement in 2018 with a total value of more than $706 million in monetary compensation and exemplary criminal penalties. Strangely enough, HouseCanary did not file the complaint, but received this prize after counterclaiming in a complaint filed by a much bigger corporation, Title Source. Finally, HouseCanary turned the tables and presented such a convincing case that a Texas State Courts panel asked if they could grant more than $403,000 in penalty damage and "if so, what would be the maximum amount we could give?
They also emphasize the need to get your house in order before you go to trial. Titles Source, now known as Amrock, defines itself as "the nation's biggest independently owned security firm providing titles assurance, ratings and locking solutions. "1 "1 The Society provides evaluation service to its affiliate Quicken Loans so that it can establish whether home loans are granted, refinanced loans and the like.
Title Source began its evaluation work with HouseCanary, a San Francisco-based start-up that specializes in providing evaluation solutions that include an automatic evaluation tool that can quickly forecast the value of properties, anticipated changes in that value, and associated risk. The HouseCanary is one of several organizations trying to help automatize house valuations using technologies that rely on traditional hand held procedures and house inspection.
HouseCanary has a different perspective on things. Following HouseCanary's advice, Titlesource looked for more and more detail about its assessment models and at the same time assured House Canary that Titlesource was not using the information to create its own mode. On April 12, 2016, Titlesource brought a lawsuit in Texas State Court for non-compliance with the license terms and violation of the NDA because HouseCanary had disclosed its privileged license with Titlesource.
Then HouseCanary filed counterclaims for violation of contracts, cheating and embezzlement of business confidentiality. In the course of the process, HouseCanary learnt that Titlesource had actually created its own automatic assessment scheme. HouseCanary, for example, found a non-Domain Source paper on-line, in particular a paper from a Quicken Loans Technology Conference held in September 2016 entitled "Title Source Automatically Valuation Model".
Also, the discoveries showed that Title Source downloads over 150,000 HouseCanary house value reviews between January 6, 2016 and May 19, 2016, and that Title Source had already scheduled several prospective HouseCanary database related activities before that date. HouseCanary's case analysis showed that this and other evidences showed that Title Source was violating their agreement by having loaded down tons of sensitive information to redevelop HouseCanary's work.
This lawsuit took seven consecutive week, with the first half focused on Title Source's claim against HouseCanary and the second half on HouseCanary's business confidentiality and contractual claim against Title Source. Upon conclusion of the process, the 12-member panel of judges found that Title Source was misusing business confidentiality, violating company conventions and committing frauds by reassuring HouseCanary that it had not developed its own competitive evaluation model.
HouseCanary was granted $201.6m by the panel of judges for embezzlement of business secrets, twice as much ($403.2m) as typical compensation for embezzlement, $33.8m for cheating and twice as much ($67.6m) as typical compensation for cheating. In addition, the panel dismissed all Title Source's allegations against HouseCanary, including that HouseCanary did not defraud HouseCanary or breach its obligation to Title Source.
Name-source is a case that demonstrates the utmost thoroughness in obtaining sensitive information from licensors. Finally, it shows that a business should perform a thorough due diligence prior to bringing a claim and should supervise the activity further, also with a view to reaching an agreement if the case arises. HouseCanary's source could and should have been more careful with the sensitive information it obtained from HouseCanary.
In connection with this, it was the Uniform Trade Secret Act (UTSA) under Texas state laws which by and large defined a business secret as any information which, by reason of its confidentiality, has an impartial commercial value (in particular because it is not generally known or readily apparent by appropriate means from anyone who could derive value from its disclosure), and that is the object of appropriate effort to preserve that confidentiality.
The ''assessments, analyses, measures, records or data'' referred to in the title source are directly covered by this provision. Against this background, Title Source was given business secrets that should be treated very seriously. During the study, what the title source did with this information was the subject of heated controversy. Title Source, for example, claimed that it did not "use" HouseCanary's information to create its own rating pattern.
It could have safeguarded itself from possible embezzlement (or the semblance of such embezzlement) by blocking its privacy teams from gaining entry to HouseCanary's sensitive information and expressly telling those who had gained entry to HouseCanary's information not to work on rival offerings. A lot of businesses conduct back-to-back business with competitive goods or service, and these business operations are usually permitted.
However, that was the point at Title Source-Reverse was explicitly banned in the NDA and the license deal. Title House has been held liable for both contractual violations and the embezzlement of business secrets in the performance of this illegal work. "9 "9 The Tribunal then found that the greater part of the damage (more than 90%) resulting from this embezzlement was unduly award.
It will be recalled as a case of monsters for mental ownership that could have been prevented. This shows the singular and menacing character of the business secrets.