Black Knight awarded $155M in trade secrets theft lawsuit against Pennymac

Key Takeaways:

– Black Knight accused PennyMac of copying its mortgage servicing platform to create its own platform
– An arbitrator awarded Black Knight $155.2 million in damages for breach of contract, representing six years of avoided license fees
– PennyMac will keep all its intellectual property and software, including its platform, “free and clear of any restrictions on use”
– The arbitrator’s conclusion is an interim award that can still be corrected, modified, or vacated
– Black Knight initially sought $340 million in damages and declaratory relief in its lawsuit against PennyMac
– The arbitrator denied claims of trade secrets misappropriation and injunctive and declaratory relief
– PennyMac believes the arbitrator’s conclusion is wrongful and that the increased speed of developing its platform was due to its access to Black Knight’s system
– The accrual related to the interim award will have an impact of $2.85 per share on PennyMac’s fourth-quarter earnings
– Analysts expect a modestly negative reaction to the charge, which equates to roughly 4% of book value.

HousingWire:

An arbitrator conclusion issued last week caps a four-year legal battle over allegations of trade secret theft involving two of the biggest companies in the housing industry, Black Knight Servicing Technologies and PennyMac Financial Services

In a 2019 lawsuit, Black Knight accused Pennymac of copying its mortgage servicing platform, MSP, to create its Servicing Systems Environment (SSE) platform. 

On Nov. 28, an arbitrator awarded Black Knight $155.2 million in damages related to a breach of contract claim (plus interest and attorney’s fees), representing six years of avoided license fees.

Meanwhile, according to the arbitrator’s conclusion, Pennymac will keep all its intellectual property and software, including SSE, “free and clear of any restrictions on use.” Pennymac said SSE has allowed it to reduce its servicing costs per loan by over 30% since its implementation.

The arbitrator issued an interim award, which means the companies can still move to correct, modify or vacate it before a state court confirms it. 

Black Knight filed a complaint against PennyMac in November 2019 for breaching contracts and misappropriating trade secrets. According to the plaintiff, Pennymac stole its mortgage-processing system and created one of its own. 

The lawsuit, filed in the Fourth Judicial Circuit Court in and for Duval County, Florida, sought $340 million in damages and injunctive relief under the Florida Uniform Trade Secrets Act and declaratory judgment of ownership of all intellectual property and software developed by or on behalf of Pennymac. 

In March 2020, the companies entered arbitration. 

More than three years later, the arbitrator awarded, in part, Black Knight‘s breach of contract claim and denied the claims of trade secrets misappropriation and injunctive and declaratory relief.

“The arbitrator concluded (wrongfully in our view) that Pennymac’s access to MSP allowed it to increase the speed of developing SSE and awarded Black Knight lost profits in the form of licensing fees it would have otherwise received from Pennymac over a longer development period,” Pennymac said in an 8-K filing with the Securities and Exchange Commission (SEC). 

ICE, the new owner of Black Knight, said in a statement that it “will continue to seek the robust protections afforded to trade secrets and confidential information under federal and state law, including in products developed using its confidential information.”

According to Pennymac, the accrual related to the interim award will be recorded in the fourth-quarter earnings, with an impact of $2.85 per share. The company states it had $1.2 billion cash on its balance sheet as of Sept. 30 to fulfill the interim payment.

Analysts who cover Pennymac at Jefferies wrote in a report that they “would expect a modestly negative reaction to the charge, which equates to roughly 4% of book value.”

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Property Chomp’s Take:

is a common HTML element used in web development. It is short for “division” and is used to create a block-level container on a webpage. The

element is often used to group and organize other HTML elements, such as text, images, forms, and other elements, into sections or containers.

In the recent legal battle between Black Knight Servicing Technologies and PennyMac Financial Services, the

element has nothing to do with the case. However, it serves as a reminder of the importance of understanding and utilizing HTML elements in web development.

The legal battle between Black Knight and PennyMac revolved around allegations of trade secret theft. Black Knight accused PennyMac of copying its mortgage servicing platform, MSP, to create its own platform, SSE. After four years of legal proceedings, an arbitrator recently issued a conclusion in favor of Black Knight, awarding them $155.2 million in damages for a breach of contract claim.

Despite the ruling in favor of Black Knight, the arbitrator concluded that PennyMac can keep all its intellectual property and software, including SSE, without any restrictions on use. This decision has allowed PennyMac to reduce its servicing costs per loan by over 30% since implementing SSE.

It is worth noting that the arbitrator’s conclusion is an interim award, which means it can still be modified or vacated before being confirmed by a state court. Both companies have the opportunity to challenge or modify the decision if they choose to do so.

The legal battle between Black Knight and PennyMac began in 2019 when Black Knight filed a complaint against PennyMac for breaching contracts and misappropriating trade secrets. Black Knight sought $340 million in damages and injunctive relief, claiming that PennyMac stole its mortgage-processing system and created its own version.

In March 2020, the companies entered into arbitration, which ultimately led to the recent conclusion by the arbitrator. While Black Knight was awarded damages for the breach of contract claim, the claims of trade secret misappropriation and injunctive and declaratory relief were denied.

Both companies have expressed their viewpoints on the arbitrator’s decision. Pennymac believes that the arbitrator wrongfully concluded that their access to MSP allowed them to develop SSE faster, resulting in lost profits for Black Knight. Black Knight’s new owner, ICE, stated that it will continue to protect its trade secrets and confidential information under federal and state law.

The impact of the arbitrator’s interim award will be reflected in Pennymac’s fourth-quarter earnings, with an estimated impact of $2.85 per share. Analysts at Jefferies expect a modestly negative reaction to this charge, which represents approximately 4% of Pennymac’s book value.

While the legal battle between Black Knight and PennyMac does not directly involve the

element, it serves as a reminder of the importance of understanding HTML elements in web development. The

element, along with other HTML elements, plays a crucial role in structuring and organizing content on websites. Developers must have a deep understanding of these elements to create effective and visually appealing webpages.

In conclusion, the recent legal battle between Black Knight and PennyMac highlights the significance of HTML elements in web development. While the

element is unrelated to the case, it serves as a reminder of the importance of understanding and utilizing HTML elements properly. As the digital landscape continues to evolve, developers must stay updated with HTML and other web development technologies to create innovative and user-friendly websites.

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