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INSIGHT: PR Campaign for Amrock Should Concern All Trade Secret Holders

Feb. 13, 2020, 9:01 AM

Dozens of columns have appeared online in the last 23 months questioning the landmark ruling that awarded HouseCanary $740 million in damages for intellectual property theft by Amrock.

The columns share similar soundbites and rhetorical sleights of hand, failing to engage the actual evidence. They are an orchestrated PR campaign with a clear intent: to bias public opinion in the advance of an appeal.

I was a member of HouseCanary’s legal team that defended against Amrock’s lawsuit, so I know first-hand how important trade secret laws are for disruptive companies. In this matter, the law allowed HouseCanary to protect its intellectual property and argue an evidence-based case that Amrock had willfully and purposefully stolen the trade secrets of an up-and-coming competitor.

The false allegations by Amrock’s allies do more than cast doubt an individual case. They also cast doubt on laws that spur economic innovation. These so-called experts are advancing a dangerous narrative that should concern every entrepreneur, investor, and business leader who may one day need trade secret laws to protect their intellectual property.

The oral arguments in Amrock’s appeal are set for Feb. 19 and here are the facts.

Amrock Sued HouseCanary

In March 2018, a jury in San Antonio, Texas, unanimously awarded HouseCanary $706.2 million because Amrock (then known as Title Source) brazenly stole trade secrets and intentionally defrauded HouseCanary.

The verdict followed a fair and measured trial. This case has nothing to do with so-called “jackpot justice.” In fact, Amrock invited this entire judicial process—it sued HouseCanary.

Game Changer Technology

Amrock is in the business of providing appraisals and related real estate services to its affiliate, Quicken Loans, and others. As the appraisal industry faced technological disruption due to the emergence of automated home valuation models (AVMs), court documents show Amrock was desperate to “hurry up” and obtain this “game changer” technology before it was left behind.

Enter HouseCanary, a start-up that had invested millions in compiling proprietary algorithms, software, and data to build exactly the analytics Amrock coveted.

Starting in late 2013, Amrock and HouseCanary executed a series of agreements through which Amrock gained access to HouseCanary’s intellectual property. Importantly, these agreements included clear provisions through which Amrock agreed not to “reverse engineer” or develop “any software product or business system derived from” confidential information received from HouseCanary.

Email Evidence

Evidence produced at trial showed that Amrock had no intention of abiding by its agreements.

The evidence included emails showing Amrock employees discussing how they could acquire HouseCanary data in order to “use/build products for ourselves. In one message, an Amrock employee joked that they should call their effort “the Birdcage” since they were capturing so much HouseCanary data.

In another message, an Amrock employee promised that “after we receive significant enough data, we can develop our own [home valuation model].” Other evidence showed this is exactly what happened. After Amrock abruptly terminated its agreements with HouseCanary, Amrock unveiled its own AVM to its affiliate Quicken Loans and others. Direct evidence presented in court shows this Amrock AVM was trained by and built with HouseCanary’s trade secrets.

Verdict

After seven weeks of trial, 15 fact witnesses, five expert witnesses, and 1,400 exhibits, the jury sided with House Canary on every single charge.

To those familiar with the evidence, the result was not a surprise. In court, the jury heard the incredible testimony of Amrock’s witnesses who—without any experience in developing models or working with real estate—claimed to do in minutes and months what HouseCanary had spent years accomplishing.

The jury also heard Amrock’s shifting stories—from claiming it had no valuation model to claiming it developed those models independently, to admitting it used HouseCanary’s analytics data for its modeling but then arguing that was permissible under the contract despite all of the restrictions.

The evidence also supported the award, just as the evidence supported the verdict. The jury heard extensive evidence about how valuable HouseCanary’s technology was to Amrock, which is why Amrock wanted to steal the technology to use the models on an unlimited basis for all of the Quicken Family of companies and beyond.

Amrock allies now talk of “whistleblowers” who supposedly emerged after the case was tried. What is not mentioned is that these individuals, all of whom have ties to Quicken Loans or Amrock, were on the company’s original witness list. They offered nothing the jury had not heard and rejected already, which is why the trial court judge denied Amrock’s request for a new trial.

Appeal

With oral argument set, all who value trade secret protections should be on the lookout for more attacks.

When those attacks appear, remember: No matter how many times Amrock’s allies try to distract from the evidence, the facts have shown that Amrock stole HouseCanary’s technology and was caught red-handed at trial. The evidence, not an orchestrated media campaign, will confirm Amrock’s theft.

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.

This column is a response to a previously published Insight.

Author Information

Ricardo Cedillo is a partner in the San Antonio firm Davis, Cedillo & Mendoza Inc and a member of the HouseCanary trial team who was in the courtroom every day during the Title Source vs. HouseCanary trial.

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