Pega response to Appian lawsuit
Latest Update: Appian Judgement Reversed
The Latest
On July 30, 2024, the Court of Appeals of Virginia reversed the 2022 judgement against Pega on multiple grounds and remanded a new trial.
Pega statement on judgement reversal
"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."
Conclusion from Court of Appeals of Virginia opinion
Link to full opinion here.
"This complex trial ventured into uncharted legal waters and culminated in a multi-billion dollar damages award which we now reverse. We reject Pega’s claim that Appian failed to establish misappropriation of any trade secret as a matter of law. However, we agree with Pega that the trial court erred in granting Instruction 14, which relieved Appian of its proper burden to prove causation between the alleged misappropriation and any damages. Moreover, while Jury Instruction 14 erroneously permitted Appian to rely on Pega’s total “sales” to prove unjust enrichment damages, the trial court then improperly foreclosed Pega, based on Interrogatory 18, from showing that many of Pega’s total sales were in areas in which Appian did not even compete with Pega.
Under the circumstances of this case, 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 through Zou—on the basis that it was on a different laptop than provided in discovery. Finally, on remand, the trial court should refrain from instructing the jury that the number of people with access to Appian’s platform is “not relevant”—and, accordingly, should not exclude all related evidence of these numbers on that basis. We reverse the judgment as to the VUTSA claims and remand for a new trial consistent with this opinion.
Affirmed in part, reversed in part, and remanded."
Email to employees on July 30, 2024
Team Pega:
I’m excited to share a great update. Today the Court of Appeals of Virginia issued a long-anticipated decision throwing out the $2 billion award – an award that 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.’
The 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.
This is a great outcome, however we expect Appian to appeal the decision. Appian would have to overcome numerous, thorough, and well-reasoned grounds for overturning the appeal decision.
The team’s intense focus on continued innovation and client success was fully in evidence at PegaWorld iNspire, where we showcased our most recent transformative technology through hundreds of demos, client presentations, and hands-on experiences. As we look ahead, we remain committed to bringing this passion and momentum into years to come and continuing to do what we do best – help our clients solve problems fast and transform for tomorrow.
Today we issued a public statement announcing this great decision. If you get questions from clients or partners, please feel free to pass along this email.
If you need help answering any questions, send them to [email protected] and we will get back to you as soon as possible. Also given the public attention this continues to receive, if you receive a media inquiry about the recent court decision or the litigation more broadly, please forward to Lisa Pintchman [[email protected]] or Sean Audet [[email protected]].
Your ongoing focus and commitment to Pega, our clients, partners, and each other is appreciated by the leadership team. Thank you for your continued support.
Best,
Ken (Stillwell, Pega COO and CFO)
A summary of the facts on Appian v. Pega
The Background
In 2020, Appian sued Pega in a Virginia state court claiming that Pega illegally obtained Appian 'trade secrets' - even though these alleged 'secrets' were readily observable by thousands of users of Appian products. Appian further claimed Pega was enriched by incorporating those 'secrets' into Pega products, despite the fact that Pega had already offered these features.
The jury had ruled in Appian’s favor on May 9, 2022, in what Pega believes was an error-filled trial - one that limited Pega's ability to defend itself on key points and resulted in an unjust award, the largest in Virginia court history. On July 30, 2024, the Court of Appeals of Virginia reversed the jury’s judgement and ordered a new trial.
What’s Next
The case has been remanded for a new trial at a future date. Pega expects Appian to appeal the decision before a new trial begins. Despite this unwelcome distraction, we remain laser focused on its mission to help its clients unlock business transforming outcomes. This is evident in our stream of powerful technology innovations, our financial results, our high client retention rates, and outstanding recognition in numerous industry analyst reports. Importantly, there are no restrictions on any of Pega’s products, now or in the future.
Highlights of Pega's Position
As we’ve said consistently, we believe there are significant flaws in the Virginia County Court’s unprecedented outcome.
As we’ve repeatedly stated and outside experts have agreed, there were significant errors in the trial.
There are no “trade secrets” in this case.
Appian failed the basic threshold requirement of keeping a “trade secret” secret, forfeiting the right to legal protection for these supposed secrets. The company marketed and made its platform available to thousands upon thousands of people, often without any confidentiality requirements and often without even knowing the identities of the people who were given demonstrations of its software. Appian also gave explicit permission to software resellers to freely demonstrate its platform to anyone they wished. These potential customers were free to take unlimited screenshots and videos of these demos and to share them however they liked.
This is also a software case without the software.
At trial, Pega hotly disputed that anything from Appian was copied into our platform – and we were prepared to prove it to the jury, by demonstrating earlier versions of our platform. But the trial court incorrectly prevented that from happening, so the jury didn’t get the chance to see it for themselves.
Appian’s characterizations of the facts in this case have been consistently misleading.
A technology staffing firm connected Pega’s former (now Appian’s current) head of competitive intelligence with a part-time consultant who provided occasional demonstrations and discussions of Appian’s commonly available platform over the course of 18 months. The consultant was simply one of thousands of individuals using Appian’s platform to create apps; he had no inside access to their platform beyond what every user of Appian software could already see.
At the trial, Appian had to acknowledge that its platform had severe weaknesses—including data loss.
Appian claimed these weaknesses—what they referred to as “sensitive structural limitations of Appian’s platform”—were in fact legitimate trade secrets. We disagree and think it is healthy for customers to understand any "sensitive structural limitations."
Appian questions Pega’s decision not to contest a $1 judgment.
Both Appian and the jury agreed that the value of the claims under the Virginia Computer Crimes Act (VCCA) amounted to a mere $1 award. We won’t waste the appellate court’s time with this and will stay laser focused on the legal errors we covered in our appeal.
The appeals process update.
Both parties presented oral argument before the Court of Appeals of Virginia on November 15, 2023. The court reversed that judgement on July 30, 2024 and ordered a new trial. Pega expects Appian to appeal the reversal before a new trial begins.
There are no limits on how Pega develops, sells, or provides service on our products, now or in the future.
Appian withdrew its request for such restrictions, and there is no impact on Pega’s products or what we can sell and service.