In its opinion, the Court of Appeals of Virginia fundamentally misread and misapplied
precedent from the Supreme Court of Virginia and failed to give due regard to the
trial judge's evidentiary determinations and trial misconduct by
Pegasystems
MCLEAN, Va., July 31, 2024 /PRNewswire/ -- Appian
(Nasdaq: APPN) announced today that it will appeal the decision by
the Court of Appeals of Virginia
and seek to reinstate its judgment of willful and malicious trade
secret misappropriation against Pegasystems Inc. ("Pega"). The
verdict from the jury was based on seven weeks of testimony from
dozens of witnesses and thousands of pages of documents
demonstrating that Pegasystems employed a "spy" to analyze the
inner workings of Appian's software, improve its own product, and
generate billions of dollars in revenue based on its
misappropriation.
Despite Pega's claims that there were no "trade secrets" in the
case, the Court of Appeals expressly held that Appian presented
sufficient evidence to the jury of its trade secrets and that
Appian had used reasonable measures to protect those trade secrets.
The Virginia jury also found
Pegasystems violated the Virginia Computer Crimes Act, but
Pegasystems declined to appeal that ruling, meaning that the
Virginia Computer Crimes Act violation by Pegasystems is confirmed
and final.
The ruling from the three-judge panel of the Court of Appeals
sending the case back to the trial court related to the exclusion
of evidence, as well as the burdens of proof related to damages in
a trade secret case once misappropriation is proven. The Court's
ruling that Pegasystems, which has all the evidence related to its
own sales, does not have to show that its sales were unrelated to
its unlawful misappropriation isolates Virginia from the rest of the country's view
on trade secret protection. Hypocritically, Pegasystems itself
argued that this burden shifting was the correct approach to
damages when engaged in its own trade secret litigation.
Appian also believes the Court of Appeals' reversal of several
evidentiary rulings by the trial court was the result of its
failure to give appropriate regard to the full record and the trial
court's discretion to conduct a trial over seven weeks involving
significant misconduct by Pegasystems. Those rulings were well
within the trial judge's authority and, with respect to several of
the rulings, invited by Pega itself.
"We will appeal the ruling to the Supreme Court of Virginia and will seek to reinstate the
verdict, and remain confident that the evidence of misappropriation
and our right to corresponding damages will be properly addressed
by Virginia courts," stated
Christopher Winters, General Counsel
of Appian.
During the seven-week trial, Appian presented evidence that
Pegasystems hired an employee of a government contractor, to
provide Pegasystems with access to Appian's software as a part of
an effort to learn how to better compete against Appian. In hiring
the contractor, Pegasystems instructed its third-party contracting
service to recruit someone who was not "loyal" to Appian. Appian
put forward evidence that the contractor passed trade secret
information to Pegasystems to enable its employees to build
competitive features and train Pegasystems' sales team to better
compete against Appian. At one point in the case Alan Trefler, Pegasystems' Founder and CEO,
admitted that it was "inappropriate'' for Pegasystems employees to
have hired the contractor, and that the contractor "apparently did
things for which he was not entitled."
The contractor, referred to as a "spy" internally at
Pegasystems, helped Pegasystems generate dozens of video recordings
of the Appian development environment for use by Pegasystems in
compiling competitive materials and evaluating improvements to its
platform. Appian also submitted evidence that Pegasystems' product
development team reviewed the materials provided by the contractor
and changed the course of Pegasystems' product engineering to take
advantage of the Appian technology they saw. Appian's expert
witness testified that Pegasystems's software platform would have
become obsolete if Pegasystems had not misappropriated Appian's
trade secrets.
If a new trial is ultimately ordered, Appian will seek the full
amount of its damages claim presented in the original trial, which
exceeds $3 billion.
About Appian
Appian is a software company that automates business processes.
The Appian AI Process Platform includes everything you need to
design, automate, and optimize even the most complex processes,
from start to finish. The world's most innovative organizations
trust Appian to improve their workflows, unify data, and optimize
operations—resulting in better growth and superior customer
experiences. For more information, visit appian.com. [Nasdaq:
APPN]
Follow Appian: LinkedIn, X (Twitter).
Forward-Looking Statements
This press release includes forward-looking statements. All
statements contained in this press release other than statements of
historical facts, including statements regarding Appian's ability
to collect on the judgment and to receive attorney's fees, the
outcome of any appeal, and the timing of such matters, are
forward-looking statements. All aspects of the appeals court
decision could be subject to further appeal by Appian or
Pegasystems. Appian cannot predict the outcome of any appeals or
the time it will take to resolve them. The words "anticipate,"
"believe," "continue," "estimate," "expect," "intend," "may,"
"will," and similar expressions are intended to identify
forward-looking statements. These forward-looking statements are
subject to a number of risks and uncertainties, including the risks
and uncertainties set forth in the "Risk Factors" section of
Appian's Annual Report on Form 10-K for the year ended December 31, 2023 filed with the Securities and
Exchange Commission on February 15,
2024 and other reports that Appian has filed with the
Securities and Exchange Commission. Appian is under no duty
to update any of these forward-looking statements after the date of
this press release to conform these statements to actual results or
revised expectations, except as required by law.
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