This case in Virginia caught a lot of attention because Appian won a $2 billion verdict last year. The appeals court overturned the damages award because the jury instructions allowed Appian to offer evidence of Pegasystems' total sales and placed the burden on Appian to prove that a smaller amount of revenue was actually attributable to the use of Appian's trade secrets. Courts in patent and trade secret cases have placed a lot of attention on whether a plaintiff has proven that the damages sought are directly attributable to the intellectual property. This is another case clearly in that vein. A trade secret plaintiff should strongly consider offering a “backup” damages position that allocates revenue on a per-trade secret basis to ensure they can get to trial on a damages theory.
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$2B Trade Secret Verdict Overturned on Causation
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The Court of Appeals of Virginia on Tuesday reversed Appian Corp.'s $2 billion trade secrets judgment against competitor Pegasystems Inc., saying that the trial court made a series of errors on its way to the biggest jury award in state history and that a new trial was warranted.
The trial court, Fairfax County Circuit Court, wrongfully allowed Appian to rely on Pegasystems' total sales over a certain period to prove unjust enrichment damages and then "improperly foreclosed" Pegasystems from showing that many of its total sales were in areas where the companies did not compete, a three-judge panel concluded unanimously. It also said the trial court erred in relieving Appian of its "proper burden to prove causation between the alleged misappropriation and any damages" through jury instruction.
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