California-based Top Agent Network files suit against Zillow claiming trade secrets theft.
Earlier this week, Calfironia-based Top Agent Network, a private, member-only online community where verified top producing agents in local markets can collaborate and exchange information, filed suit in U.S. District Court for the Northern District of California against real estate Web giant Zillow. The pending lawsuit alleges that Zillow, through the guise of investor interest, stole proprietary trade secrets and later leveraged them to create the listing service’s recent “Coming Soon” feature, which has been met with both praise and criticism.
Court documents, which TAN filed on Monday, claim that Zillow coaxed out the network’s confidential information by feigning interest in a future investment.
What the Suit Claims
The filed suit, now publically available, provides a laundry list of accusations levied against Zillow, including:
- The listing service duped TAN through a potential investment that lead the network to releasing confidential and proprietary information, as well as its business strategy, metrics and overall model.
- TAN claims Zillow provided assurances that the company “would keep this information confidential, and that it would be used solely for evaluating a potential investment in TAN.”
- After bowing out of the investment in May 2014, telling TAN that it was “just not what we do nor have ever done,” Zillow launched its Coming Soon feature four weeks later.
A Case to Be Made
In a statement released following the story’s break, TAN CEO David Faudman defended the company’s initial issuing of the information to Zillow, saying that the network is “based on the principle that collaboration among trusted participants is the key to success and we approached this transaction in that spirit.”
Faudman went on to say that while several online real estate systems offer some derivation of the coming soon tool, TAN’s system is particularly well built out – a testament to years of development.
“Our proprietary system, the strategy behind it and the particular features and tools offered to our members are unique to TAN,” he said. “They collectively explain why we have succeeded where other industry players have not.”
California is one of several states that have adopted the Uniform Trade Secrets Act, and in the state’s civil code, section 3246-3246.11, it clearly states the improper acquisition of trade secrets include “misrepresentation,” which is likely what TAN will be arguing.
“The lawsuit contains serious allegations against Zillow, which we believe reflect a willingness to put corporate profits over business ethics,” Paul Llewellyn, an attorney for TAN, said. “We are filing this lawsuit to hold Zillow accountable for its actions.”
At this point, it’s difficult to speculate on how the lawsuit will play-out.
TAN’s suit represents the second of such trade secret cases filed against Zillow this year. According to GeekWire, Move Inc. filed a lawsuit earlier this year alleging that its former chief strategist, Errol Samuelson, “violated trade secrets when he left his executive position to join Zillow.” Samuelson was effectively “sidelined” when a Washington state Superior Court granted a preliminary injunction against both him and Zillow.