Hogan Lovells secures significant jury verdict for ResMan in software trade secrets dispute

The jury returned a unanimous verdict awarding US$152.29 million damages, consisting of US$32.29 million in compensatory damages and US$120 million in punitive damages.

“We are grateful for the Jury’s verdict and appreciate the hard work of our trial team under very difficult circumstances,” said Paul Bridgewater, Chief Executive Officer of ResMan. “This case is very important to ResMan because our intellectual property is one of our most valuable assets. Our trial team partnered closely with us to protect our state-of-the art property management solution.”

Property management software company ResMan sued former customer Karya after Karya, working with global software development company Expedien, improperly accessed ResMan’s software to develop Karya’s own property management software. The rival software, named Arya, was developed after Expedien accessed ResMan’s system more than 1,000 times without ResMan’s knowledge or permission. The evidence of this access included recorded teleconferences between Expedien and Karya to analyze the ResMan system and determine which features should be included in the Arya software.

Maria Wyckoff Boyce, who led Hogan Lovells’ trial team, said: “This hard-fought case tried in the middle of the pandemic involved important issues surrounding the unauthorized use of computer software to develop a rival product. The Jury’s verdict for ResMan provides important relief for our client and its hard-working employees, who spent years and many millions of dollars developing this ground breaking proprietary software used to manage apartment buildings throughout the United States.”

The firm was hired to represent ResMan in June 2020, less than five months before the first trial of this case. That trial proceeded for six days in November 2020, before an outbreak of COVID cases among jurors, trial participants, and courthouse personnel resulted in a mistrial. There were no COVID-related issues during the second trial.

At the second trial, the jury found:

1. Karya breached its Master Subscription Agreement with ResMan, which prohibited the use of ResMan’s software for any purpose other than managing Karya’s properties and prohibited providing access to third parties such as Expedien.
2. Expedien tortiously interfered with the Master Subscription Agreement between ResMan and Karya by accessing ResMan’s software and using this access to build Arya.
3. Both defendants improperly acquired, disclosed, and used ResMan’s valuable trade secrets.

Following the jury verdict, ResMan will seek injunctive relief and attorneys’ fees from the court.

The Hogan Lovells team was led by Houston trial partners Maria Wyckoff Boyce and Cristina Espinosa Rodriguez, with support from appellate partner Jessica Ellsworth. Boyce and Rodriguez have tried four jury trials to verdict together—three of them contract/trade secret cases and three of them in the Eastern District of Texas.

Ellsworth, a Washington, D.C. appellate partner, has argued more than 60 appellate matters, including cases brought before the Federal Circuit and Fifth Circuit.

Also assisting in the ResMan case were Houston-based senior associates Jillian Beck, Ira Jamshidi, and Lee Whitesell, and associates Jennifer Bevilacqua and Sydney Rupe.

Mike Jones of Potter Minton in Tyler, Texas, served as local counsel.

The case is ResMan, LLC v. Karya Property Management, LLC and Scarlet InfoTech, Inc. d/b/a Expedien, C.A. No. 4:19-cv-00402-ALM, in the United States District Court for the Eastern District of Texas, Sherman Division.