Facts

Weiss Residential Research LLC was founded in 2008 after the housing crisis to provide granular analytics such as house-specific valuations and indexes for over 90M+ residential properties that identify and predict trends better than available methods. Experian Information Solutions, Inc. partnered with Weiss and began working together to combine Weiss's property-centric data with Experian's consumer-centric data. Weiss and Experian entered into a series of agreements during the course of the partnership, including a Data License agreement, five amendments to the data license agreement, and a Commercial Agreement. The Commercial Agreement included exclusivity and right of first refusal terms, requiring each party to first offer a development proposal to the other before seeking to further develop product ideas with any third party, commensurate with the parties' respective contributions. Additionally, the parties were prohibited from using the other's intellectual property in any products developed with any third party. Experian did not commercialize an end-use CECL product with Weiss data, but did engage in substantial product development activity with Weiss and using Weiss's data. When Weiss objected to Experian's development proposal because it was not commensurate with the parties' contributions, Experian elected to not renew its license of Weiss data and terminated the parties' relationship. Concerned that its intellectual property was being misused and misappropriated, Weiss brought an action against Experian.

PLAINTIFF'S CONTENTIONS: Plaintiff alleged that defendant fraudulently induced Weiss to enter into agreements, breached its contracts, and misappropriated its intellectual property. Experian never intended to develop a commercial product with Weiss. Instead, Experian cultivated the partnership to gain access to Weiss's intellectual property and trade secrets. In fact, Experian could not have honored the Weiss-Experian agreements because it entered other agreements that gave intellectual property rights and revenue shares to third parties. When Weiss objected, Experian implemented a plan to force Weiss out of the partnership by, for example, unreasonably prolonging negotiations, creating revenue share terms that artificially capped Weiss's estimated share, and interfering with Weiss's access to the joint projects before the partnership concluded. While Experian was endeavoring to pretextually terminate its partnership with Weiss, Experian was simultaneously engaging with third parties to develop and commercialize products developed with Weiss, in violation of the Parties' agreements. Experian is still developing and commercializing products that are based on Weiss Intellectual Property.

DEFENDANT'S CONTENTIONS: Defendant denied all contentions. Defendant argued that plaintiff pursued its trade secrets claims in bad faith to retaliate against defendant for terminating the parties' relationship, evade the parties' agreed upon consequential damages waiver and attempt to recover millions of dollars in nonexistent lost profits. Defendant asserted that plaintiff failed to demonstrate its home valuation data constituted a trade secret because this data was merely the output of plaintiff's algorithms, rather than the algorithms themselves. Defendant maintained that even in the event plaintiff could prevail on its claims, its only theory of damages was for future lost profits; such damages were entirely speculative because they were based on potential future profits of new and untested products; and because there was no defined market for the CECL model, there was absolutely no basis to conclude that defendant would have any sales at all, much less the numbers predicted by plaintiff's expert.

Result

Summary Judgment in favor of Experian based on a preclusion of lost profits damages in the parties' Commercial Agreement.