Spies, lies, and videotape: Appian’s $2bn win
It is every company's nightmare: a spy infiltrates the heart of the business and delivers a potentially fatal strike by stealing its valuable IP.
This was the scenario apparently confronting tech company Appian, which in 2020 said it had discovered that a "spy" had stolen trade secrets.
Appian took action by suing the software company, Pegasystems, for trade secrets theft, and on May 9, a Virginia court delivered a record $2 billion jury verdict in its favour.
In the wake of the verdict, Appian general counsel Christopher Winters insisted that the lofty amount was justified.
“We put forward strong evidence that Appian trade secrets were misappropriated by Pegasystems. The award of substantial damages to Appian is entirely appropriate given the nature and extent of what Pegasystems did,” he said.
According to Appian, the corporate espionage had cost them 201 customers over eight years, which led to software company Pegasystems being “unjustly enriched” by $479 million as a result.
During the trial, Pegasystems had countered that the information at issue could not be categorised as “trade secrets” because some of it was sourced from publicly available materials.
The company has since confirmed that it plans to appeal the verdict and "vigorously" pursue post-trial remedies to overturn what it has lambasted as an “unjust result”. A full statement can be viewed here.
Speaking to WIPR, Muhammad Faridi, partner at Patterson Belknap Webb & Tyler, who represented Appian, predicted that the verdict could herald a seachange in trade secrets litigation.
“The sheer dollar amount that the jury awarded to Appian is the largest to be handed down by the Virginia state or federal jury to our knowledge, and it's also one of the most significant trade secret verdicts recorded in the US,” confirmed Faridi.
A tangled web
Trade secret theft by insiders such as employees continues to pose mammoth risks for companies when it comes to safeguarding their IP and future profits. The cost can equate to 1 to 3% of the gross domestic product (GDP) of advanced countries, according to a 2021 report, “ Quantifying Trade Secret Theft: Policy Implications”, produced by the Centre for International Governance Innovation.
For the US alone, this means the annual cost of trade secret theft can be estimated at between $180 and $540 billion.
In addition to the startling Appian verdict, this month also saw a former Coca-Cola chemical engineer sentenced to 14 years in prison after being convicted of stealing trade secrets worth $120 million to benefit a China-based company.
