A Texas district court wrongly sealed exhibits post-trial in a $740 million trade secret case, despite those exhibits being pre-admitted with the court and discussed and displayed at trial. That's what the Texas Fourth Court of Appeals ruled on July 10 in a high-profile trade secret dispute between HouseCanary Inc. and Amrock (formerly Title Source Inc.).

This ruling, which was the first to come from a court other than the district court granting the initial verdict, introduces new questions about the veracity of HouseCanary's trade secret claims given the company's own legal arguments.

HouseCanary waited over six weeks after the completion of the trial to file a motion with the district court seeking to seal thirty exhibits it admitted into evidence. HouseCanary then narrowed its request to eight exhibits days later.

In its motion to seal these exhibits, HouseCanary asserted the documents contained its "most sensitive information." Indeed, as the Fourth Court states in its opinion, "According to HouseCanary, these exhibits reveal HousCanary's purported trade secrets."

While allowing a month and a half to pass before attempting to clean up the disclosure of essential, confidential information certainly calls into question the legitimacy of the trade secrets, the recent ruling poses a more pressing question. With the Fourth Court unsealing HouseCanary's purported trade secrets it claims are worth hundreds of millions of dollars, any observer must now ask: how can these possibly be worth that amount of money, let alone be considered trade secrets? After all, an important component of a secret is it is, in fact, secretive.

HouseCanary argued the Texas Uniform Trade Secrets Act (TUTSA), a 2013 state law based on the uniform code adopted by 46 other states, necessitated the sealing of its trade secrets. However, HouseCanary and Amrock had agreed to a stipulated protective order stating Texas Rule of Civil Procedure 76a governed the sealing of court exhibits. With HouseCanary having failed to follow the established procedure, the Fourth Court ruled the exhibits, which had been displayed and discussed in the public domain, cannot be sealed.

While the question before the court may have revolved around whether the circumstances of the case indicated sealing fell under Rule 76a or TUTSA, really it was as simple as this: Once HouseCanary crossed the Rubicon of exposing these exhibits to the public sphere without adhering to the stipulated protective order, there was no way for the court to manufacture new secrecy for those exhibits – even if HouseCanary alleged they contained valuable trade secrets.

This ruling demonstrates the importance of adhering to the procedures one agrees to and of protecting information that is considered confidential. This is an elementary insight but one that evidently bears repeating. However, the sealing dispute is perhaps more noteworthy for what it avoids.

Had the Fourth Court of Appeals upheld the district court judge's decision to seal the exhibits in question, it would have upended well-established precedent concerning what does and does not deserve such retroactive secrecy. Courts have reaffirmed for years the public has the right to access records that have been in the public domain, including exhibits entered into evidence.

Bucking this rational precedent would have reduced transparency in the judicial system. That implication is what motivated the Houston Forward Times and the Reporters Committee for Freedom of the Press to intervene and appeal the sealing order, citing the importance of protecting First Amendment rights.

Of course, overshadowing the sealing dispute is the merit of the $740 million trade secret verdict. Amrock filed its appeal brief on July 10, and the Fourth Court of Appeals is expected to rule on the appeal at a later date.

The court's review will no doubt center largely on the declarations and testimonies of four HouseCanary whistleblowers who emerged after the verdict to assert HouseCanary's products did not function and failed to meet the contractually promised capabilities.

In an evidentiary hearing after the verdict, the whistleblowers informed the court that efforts to hide the products' lack of readiness come directly from the top. HouseCanary CEO Jeremy Sicklick directed employees to brazenly misrepresent the status and capabilities of products to Amrock.

Additionally, the whistleblowers revealed HouseCanary perpetrated an extensive fraud by colluding with a single Amrock executive to maintain the ruse. In exchange for protecting the business contract with HouseCanary, Sicklick promised the Amrock executive who managed the contract a lucrative job as well as equity stake at HouseCanary.

With no one else at Amrock aware of this scheme, HouseCanary managed to sustain the high-profile client contract it relied on. In fact, the Amrock executive who colluded with HouseCanary served as one of Amrock's key witnesses during the trial – exemplifying the pervasiveness of the fraud.

The fraud revelations only became known after the whistleblowers became incensed by the verdict and spoke up. Accordingly, the jury never had the opportunity to consider this information before making its decision. It would be an understatement to say the court's outcome would look different had jurors been provided the chance to weigh this evidence.

With the appeals process underway, a new court will have the opportunity to consider all the facts at hand. This was not possible in the district court due to HouseCanary's systemic efforts to keep the truth about its products and collusion from becoming known. These efforts included offering former employees $250 per hour consulting agreements to provide unspecified "assistance to HouseCanary." The recipients of the offer viewed this as a purchase for their silence on the failures of the company's real estate valuation technology.

HouseCanary went so far as to file a motion for a temporary restraining order against Amrock to prevent discovery of its plot. HouseCanary then thought better of it and withdrew its motion the morning of the scheduled court hearing.

Until the Fourth Court of Appeals considers the merits of the jarring verdict, a young Silicon Valley startup will continue to retain a $740 million award for disputed trade secrets that are not in fact secretive. But the recent ruling to unseal the purported trade secrets may portend the ultimate ruling on the public information in question.

Thomas W. Hodge is a senior associate attorney, specializing in real estate law, at Brock & Scott PLLC.