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Judge: Trade secrets theft claim against Zillow can proceed

Court tosses two other Top Agent Network claims

A California federal judge dismissed two of the claims in the ongoing lawsuit between Top Agent Network and Zillow (Z), but let stand the main trade secrets claim that is the linchpin of the lawsuit.

San Francisco-based Top Agent Network filed suit in late October in U.S. District Court for the Northern District of California against Zillow, alleging theft of its proprietary trade secrets to create the highly touted “Coming Soon” feature.

U.S. District Judge Richard Seeborg threw out the claims of unfair competition and fraud but allowed the primary misappropriation of trade secrets claim and a claim of breach of oral contract.

The lawsuit claims that the online listing giant gained access to TAN’s confidential information by feigning interest in investing in the company when, in fact, it was simply interested in tapping into TAN's proprietary data and systems to launch a competing product.

“We are pleased the judge dismissed two more of the claims in this case and believe the remaining claims are entirely without merit,” Zillow spokesperson Amanda Woolley told HousingWire. “Beyond that, we cannot comment given the pending litigation.”

Paul Llewellyn, an attorney with the San Francisco firm Lewis & Llewellyn, which represents Top Agent Network, was likewise good with the decision.

“We are very pleased with the court’s ruling, especially related to the trade secrets claim, and we look forward to proceeding with the case,” Llewellyn told HousingWire.

Judge Seeborg has rejected a number of the initial claims in the lawsuit, but by allowing the primary complaint, the lawsuit goes to the next phase. The next stage in the lawsuit will be discovery and depositions. A copy of the initial lawsuit filing can be read here.

TAN alleges that its CEO, David Faudman, contacted Zillow executive Greg Schwartz in February of 2014 to discuss a potential investment in TAN. Schwartz reportedly said that any information TAN shared would be kept confidential and that he planned to execute a nondisclosure agreement, which didn't happen. Faudman set up an account on TAN for Schwartz, which gave him access to members-only content, including the “upcoming listings” feature, court documents said.

The teams met in person in March 2014, but in May, Schwartz told Faudman that Zillow wasn't going to make an investment in TAN. Meanwhile, between February and May 2014, Schwartz and his team explored TAN's site extensively.

Not long after, in June, Zillow rolled out what TAN alleges is a copycat product that incorporated much of the confidential and proprietary information taken from TAN.

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