Texas court’s handling of open secrets threatens accountability – InsideSources
The First Amendment to the Constitution and the common law that preceded it protect our rights to free speech and freedom of the press, and these include the right to control almost everything in the courtrooms of our country, except for the most sensitive suits and lawsuits. One would expect American courtrooms to be the last place where secrets could be kept. However, a recent decision in a case in San Antonio threatens our right to judicial transparency and, therefore, public accountability.
Source Title vs. HouseCanary is a dispute in Bexar County, Texas, District Court in which Silicon Valley startup HouseCanary won a record verdict of more than $700 million after alleging Title Source misappropriated its trade secrets or aspects of a software application that estimates the value of houses. Title Source successfully appealed the verdict and the case will likely be retried.
Curiously, seven weeks after the trial, HouseCanary asked the court to place certain exhibits under seal – that is, to prohibit public access to them – claiming that the documents contained trade secrets. The exhibits were presented in open court and therefore public for almost two months, but the court granted HouseCanary’s request and placed them under seal. Suddenly the public records were no longer public. That sealing was appealed separately to the Texas Supreme Court, which overturned the trial court’s decision because the trial judge followed the wrong procedure. But in December, reconsidering the motion, the trial court again ordered that the exhibits still be sealed as trade secrets.
You’d think that’s no big deal, because there are good reasons to keep trade secrets, well, secrets in court. Indeed, a company should not have to reveal its trade secrets to obtain justice against those who divert them. But HouseCanary did nothing to protect those documents at trial and only sought to seal them weeks later. And since the first trial, the sealing looks too much like an effort by HouseCanary to shield the case from scrutiny.
Disturbingly, despite court rulings, there are serious questions about whether these documents contain genuine trade secrets. After the first lawsuit, former HouseCanary employees came forward with allegations of collusion and wrongdoing by the company. One whistleblower even alleged that HouseCanary’s app “has a great UI, but doesn’t technically work.” A trade secret must have value, and HouseCanary’s app may have been worthless.
Whistleblowers notwithstanding, other experts have argued that the automated valuation models underlying HouseCanary’s software aren’t secrets to begin with and certainly aren’t worth hundreds of millions of dollars.
HouseCanary’s post-trial sealing serves to protect its first victory from public scrutiny and threatens to keep the case under wraps going forward. Open courts are a fundamental part of a free society, and our Constitution demands nothing less. Transparency is particularly pressing here, as the basis for a huge jury verdict has been seriously questioned and could be retried. The court should not order more secrecy just as the case is under closer scrutiny.