Texas Court’s treatment of open secrets threatens accountability
The First Amendment to the Constitution and the common law that came before it protect our rights of free speech and free press, and those include the right to scrutinize almost everything in our nation’s courtrooms except the most sensitive prosecutions and lawsuits. One might expect that American courtrooms are the last place secrets can be kept. However, a recent ruling in a case in San Antonio threatens our right to judicial transparency and, as a result, public accountability.
Title Source v. HouseCanary is a dispute in the District Court of Bexar County, Texas, in which HouseCanary, a Silicon Valley startup, won a record-setting 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 homes. Title Source successfully appealed the verdict, and the case will likely be retried.
Oddly, seven weeks after the trial HouseCanary asked the court to place some exhibits under seal — that is, prohibit public access to them — claiming that the documents contained trade secrets. The exhibits were introduced in open court and thus public for nearly two months, but the court granted HouseCanary’s request and placed them under seal. Suddenly, public records weren’t public anymore.
This sealing was separately appealed all the way to the Texas Supreme Court, which reversed the trial court’s decision, because the trial judge followed the wrong procedure. But in December, reconsidering the motion, the trial court ordered yet again that the exhibits must still be sealed as trade secrets.
One might think this is not a big deal, because there is good cause to keep trade secrets, well, secret in court. Indeed, a company should not have to expose its trade secrets to get justice against those who misappropriate them. But HouseCanary did nothing to protect these documents at trial and only sought to seal them weeks later. And since the first trial, the sealing seems too much like an effort by HouseCanary to shield the case from scrutiny.
Disturbingly, despite the court’s rulings there are serious questions as to whether these documents contain actual trade secrets. After the first trial, former employees of HouseCanary came forward with allegations of collusion and wrongdoing by the company. One whistleblower even alleged that HouseCanary’s app “had a great-looking user interface, but did not function technically.” A trade secret must have value, and HouseCanary’s app may have been worthless.
The whistleblowers notwithstanding, other experts have argued that the automated valuation models underlying HouseCanary’s software are not secrets to begin with, and certainly not worth hundreds of millions of dollars.
HouseCanary’s post-trial sealing serves to shield its first win from public scrutiny and threatens to keep the case secret going forward. Openness of courts is a foundational building block to a free society, and our Constitution demands nothing less. Transparency is especially pressing here, because the basis for a huge jury verdict has been seriously called into question and may be tried yet again. The court should not order more secrecy just as the case draws more scrutiny.
Stephen Klein is an attorney at Barr & Klein in Washington, where he practices free speech and election law. He wrote this for InsideSources.com.