This Trade Secrets Case Will Set the Precedent for Our Economy

This Trade Secrets Case Will Set the Precedent for Our Economy
AP Photo/Charles Krupa, File
This Trade Secrets Case Will Set the Precedent for Our Economy
AP Photo/Charles Krupa, File
X
Story Stream
recent articles

2019 feels like a lifetime ago.  Recently, I reflected on an analysis I wrote regarding the relationship between intellectual property rights protection and our economic strength, and the contrast couldn’t be more stark — our country had low unemployment rates, rising wages, and consumer confidence and small business optimism were incredibly high.

 

Fast forward just one year and, given the government’s response to the coronavirus pandemic, our economy has been crippled, shrinking 32.9 percent in the second three months of 2020. In August of 2019, I had encouraged safeguarding innovative ideas to protect our current economic environment, and just last month I participated in a “Pen Panel” for RealClearHealth in which I talked about the importance of protecting intellectual property rights as a way of solving America’s ongoing health care challenges.

 

The lesson is straightforward: robust protection of intellectual property will be essential to bringing our economy back from the disastrous straits in which we find it. History has certainly taught us this — before the pandemic, every major economic growth cycle has been preceded by some technological transformation that couldn’t have happened without our strong protection of intellectual property. Without that protection, innovators not only have no incentive to innovate, it actually stifles that innovative impulse. Why bother trying to solve problems if you cannot benefit from your hard work and creativity?

 

But there are some who have tried to game the system — to take advantage of shortcomings in our protection of intellectual property that entices bad actors to try to take advantage of others to make a quick buck.

 

One case in particular, Title Source vs. HouseCanary, comes to mind. The legal saga began with Title Source, now known as Amrock, suing HouseCanary for breach of contract after failing to produce the automated valuation model (AVM) mobile application they were hired to produce. In response, HouseCanary countersued Title Source for allegedly stealing their intellectual property in the model they eventually created in-house.

 

The case grabbed the attention of industry and legal experts across the nation given the trial jury’s March 2018 judgment, finding Title Source responsible for $740 million in damages and legal fees. The ruling stood as a frightening example to companies looking to collaborate on products, or others weighing the option of whether they wish to fight IP challenges in court.

 

Fortunately, this case was overturned by the Texas Fourth Court of Appeals on June 3rd based on a series of legal flaws. This comes as no surprise, considering several HouseCanary whistleblowers came forward post-trial to testify that the company never developed any functional technology for Amrock and their CEO Jeremy Sicklick colluded with an Amrock executive in charge of the initial negotiations between the two companies with the intention of willfully misrepresenting HouseCanary’s capabilities. The appellate court has ordered a retrial, and the case is currently making its way through the appeals process.

 

We are in the midst of tremendous uncertainty and upheaval globally — and the American economy is at a critical juncture. Now, more than at any point in time in recent history, it is vital that we take the right steps to ensure that America’s innovators can rest-assured that their ideas will be protected and that they can invest in them.  The pandemic presents us with a myriad of challenges—from the proximate challenges to mitigate risks of exposure to Covid19, to solving the thorny problems of restarting our economy. Strong protections of intellectual property will be essential to solving both. We don’t need frivolous legal challenges and excessive jury awards threatening critical progress.

 

Andrew Langer is president of the Institute for Liberty.



Comment
Show comments Hide Comments