AUSTIN – The Texas Supreme Court recently granted HouseCanary’s petition for review and will soon decide whether to reverse an appellate court’s decision to overturn an order sealing eight exhibits that the company argues protect its trade secrets.
Eyes from all over the nation have been following the complex case, which is seen by some as a threat to American innovation.
Amrock, formerly Title Source, had contracted HouseCanary, a real estate analytics firm, to develop an automated valuation model mobile app for appraisers to use on iPads in the field.
However, after HouseCanary failed to produce the app, Amrock sued for breach of contract and developed its own mobile AVM application.
In response, HouseCanary countersued, alleging Amrock misappropriated their purported trade secrets and committed fraud.
At trial, a jury sided with HouseCanary and awarded the company $706 million in damages (bumped up to nearly $740 million once attorney’s fees were tacked on).
On June 3, the Fourth Court of Appeals overturned the $706 award, finding that the jury’s decision could not stand on possible invalid theories.
And while the Texas Supreme Court may soon examine that opinion, the high court is currently occupied with a separate issue in the case for the time being.
On June 19, the Texas Supreme Court granted HouseCanary’s petition for review, which argues the trial court properly sealed the company’s trade secret exhibits – a ruling that was undone by the Fourth Court.
The Texas Uniform Trade Secrets Act (TUTSA) provides that a “court shall preserve the secrecy of an alleged trade secret by reasonable means.”
The Fourth Court held the trial court abused its discretion by sealing the exhibits under TUTSA and not adhering to Texas Rule of Civil Procedural 76a, which states a hearing will be held in open court a motion to seal records.
“While Rule 76a governs sealing court records in most litigation, it must defer when the case involves trade secrets,” states HouseCanary’s appellate brief. “As its name suggests, trade-secret litigation raises special considerations about secrecy.”
Conversely, Amrock argues HouseCanary indisputably failed to follow the procedures for sealing and that the exhibits in question were retroactively sealed six weeks after they had been publicly used in open court without any objection.
The Reporters Committee for Freedom of the Press, along with the Houston Forward Times, also filed a response asking the high court to deny HouseCanary’s petition for review.
A spokesperson for HouseCanary says the company is pleased that the high court “is taking another look at this important issue for businesses protecting their trade secrets.”
Amrock says its looking forward to the Texas Supreme Court's review of the discreet sealing issue.
"This is a narrow issue that the Supreme Court is considering and we look forward to defending the long-standing tradition of transparency in Texas courts," said Catherine Stone, of Langley & Banack, counsel for Amrock and former Chief Justice of the Fourth Court of Appeals. "HouseCanary chose to publicly display and discuss these documents in an open trial. It cannot unring that bell."