An American Arbitration Association arbitrator recently awarded Black Knight, Inc. (BK) $155M stemming from Pennymac Loan Services, LLC’s (Pennymac) alleged use of its mortgage-loan servicing platform to develop its own competing product. Though the arbitrator did not find Pennymac liable for trade secret misappropriation, they found that the use of BK’s product accelerated the development of Pennymac’s product and caused BK to lose licensing profits.

In 2008, Pennymac contracted with Fidelity Information Services, Inc. to use a mortgage-loan servicing platform (MSP) that enables mortgage-loan servicers like Pennymac to track and store loan data and transactions in their portfolios and to manage servicing activities. The parties’ agreement included a section on ownership, confidentiality, and non-disclosure that identified confidential information, required Pennymac’s subservices to have limited access to the confidential information, and identified the exceptions to confidentiality. The agreement prevented Pennymac from modifying the confidential information or creating any derivative works, but it listed as an exception to confidentiality any information developed independently.

Read the full post on Proskauer’s Minding Your Business blog.