The Court of Appeals of Virginia has reversed the $2BN verdict in favor of Appian in its ongoing legal dispute with Pegasystems.
The dispute dates back to 2020, when Appian filed a lawsuit against Pegasystems, accusing the company of corporate espionage and misappropriating Appian trade secrets.
To do so, Pega allegedly used multiple infiltration tactics, such as recruiting a spy with inside secrets, as part of an operation reportedly called “Project Crush”.
Two years later, the courts sided with Appian, slamming Pega’s conduct as “willful and malicious” and handing down a $2BN jury verdict. That represented the largest damages verdict in the history of Virginia courts.
Yet, the Virginia Court of Appeals has overturned the verdict and granted Pegasystems a new trial.
In doing so, Judge Frank K. Friedman agreed with Pega’s motion that the trial courts made a “series of errors” relating to jury instructions and the evidence presented.
As per the latter, the judge seemed to question why the court prevented Pega from presenting demos of earlier versions of its software to prove it hadn’t copied anything across from Appian.
Indeed, in published court documents, Judge Friedman shared the opinion:
The trial court also abused its discretion by refusing to permit Pega to attempt to authenticate its software evidence and, as a consequence, by excluding Pega’s software—a principal means of demonstrating it did not steal secrets…
Nevertheless, the judge dismissed Pega’s claims that its CRM and process automation rival failed to prove the misappropriation of trade secrets legally.
An Appian spokesperson told Reuters that the business would file an appeal against the reversal of the $2BN verdict, but the company has not yet shared a comment with CX Today.
Pega Slams the Original Verdict as “Never Rational”
In a statement shared with CX Today, a Pega spokesperson noted: “We are extremely pleased by today’s decision throwing out an award we believe was never rational.
“As the unanimous decision stated, ‘the trial court committed a series of errors that require us to reverse the judgment as to Appian’s trade secret claims.’
This ruling supports our view that the verdict was a result of a flawed trial on many fronts, including that we were prevented from showing that our software never adopted any Appian supposed trade secrets.
“As we’ve said from the beginning, the overturned judgment had the structural integrity of a skyscraper of cards, so it is no surprise it has collapsed.
“We applaud the court for seeing through Appian’s tactics to prevent the jury from hearing critical facts in this case.”
On the news, Pegasystems stock gained seven percent while Appian dropped by four percent.
Meanwhile, everyone at Pega will breathe a big sigh of relief, with stakeholders previously questioning Pega’s ability to fund the original judgment had it not been overturned.
Stakeholders raised these concerns in a separate lawsuit against Pega, which related to CEO Alan Trefler’s investor assurances that the Appian case was “without merit” before the $2BN judgment.
In April, Pega agreed to resolve this shareholder lawsuit for $35MN. Yet, as Appian appeals the latest decision and Pega plans for a retrial, expect this saga to rumble on.
