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Bloomberg
One of the biggest trade secrets cases in US history took a bizarre turn, with the company that lost a $706 million jury verdict saying it uncovered ‘bombshell’ evidence of fraud thanks to whistle blowers who used to work for the winning side.
Amrock Inc., an affiliate of mortgage-lending firm Quicken Loans Inc., in March lost a trial in Texas against the data-analytics firm HouseCanary Inc., which Amrock sued in 2016. At the center of the suit is a botched licensing deal for Amrock to get cutting-edge home-appraisal software from HouseCanary, whose backers include former Alphabet Inc. Chairman Eric Schmidt’s family office.
While Amrock claimed HouseCanary’s products were “completely unusable,” the jury saw it differently. The panel found Amrock copied HouseCanary’s trade secrets and then backed out of their agreement early while still owing $5 million to the San Francisco-based company. Amrock was shocked by the jury award, which was enhanced by “exemplary” and punitive damages.
Amrock, which calls itself the biggest independent title-insurance and valuation firm in the US, said in a court filing that a pair of former HouseCanary employees were also shocked by the verdict, and came forward with first-hand accounts that Amrock’s allegations were spot on.
The whistle blowers have signed sworn declarations saying HouseCanary’s technology at the relevant time wasn’t proprietary, that their products weren’t ready for market and that Amrock, formerly known as Title Source, was intentionally misled. Much of the technology was actually licensed by a third party and simply overlaid by a HouseCanary interface, they said.
As word of Amrock’s investigation spread, representatives of HouseCanary offered the former employee a consulting job for $250 an hour ‘with no specifically-defined scope of work, nor any minimum or maximum number of hours per month,’ according to the filing.
“After considering the offer, I concluded that the offer was actually an attempt to get me ‘under contract’ to HouseCanary and to prevent me from speaking to anyone,” the second whistle blower said.