The $100 million Envestnet Yodlee lawsuit involving technology startup FinancialApps is moving ahead after a federal judge denied the turnkey asset manager’s July 20 motion to dismiss the allegations.
The claims against Envestnet include trade secret misappropriation, breach of contract and fraud, among others, and proceedings are now scheduled to enter into the discovery phase, according to court documents filed Aug. 25 in a federal court in Delaware.
“FinApps is pleased with the court’s well-reasoned opinion,” Marc Kasowitz, partner at Kasowitz Benson Torres and former personal attorney for President Donald Trump told InvestmentNews. “FinApps looks forward to vindicating its position at trial.”
The initial lawsuit, filed last August, alleged Envestnet devised a multi-year scheme to steal proprietary technology and trade secrets after a partnership between the two firms soured. FinApps also claimed it possessed emails in which top Yodlee employees discussed “reverse engineering” the firm’s proprietary technology.
The FinApps platform lets financial institutions provide data analysis and credit reports to facilitate consumer requests for credit, loans, mortgages and other types of financing.
FinApps’s 80-page complaint also alleges that Yodlee was solely interested in entering into a licensing agreement in order to gain access to, and misappropriate, its technology so that Yodlee could develop their own competing application.
“The claims filed by FinancialApps are baseless and we are vigorously defending ourselves. We hold ourselves to the highest ethical standards with regard to business dealings with customers, partners, and employees, particularly with respect to intellectual property rights,” said a spokesperson on behalf of Envestnet Yodlee. “Notwithstanding the plaintiff-friendly standard on a motion to dismiss whereby the Court must accept all of FinancialApps’s allegations as true, the Court ruled in favor of Envestnet and Yodlee and actually dismissed two counts, including claims alleging copyright infringement and violations of the Illinois Deceptive Trade Practices Act.”
Since FinApps filed its lawsuit against the $3 billion turnkey asset management platform and technology provider more than a year ago, the lawsuit has put a damper on Envestnet’s revenue, according to former CEO Jud Bergman, who died last year in a car accident in San Francisco. After the falling out, FinApps pulled its technology from the Envestnet platform, which caused the loss of income, he said during the firm’s second-quarter 2019 earnings call.
Founded in 2014, FinApps says it has spent tens of millions of dollars to develop the technology, according to the complaint.
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