Appian soars after winning $2.04 bln verdict against Pegasystems (updated)

Appian

10/05/2022 16:16

(Recasts with stock reactions, adds allegations, Pegasystems
comment, details of 2021 financial results)
    By Jonathan Stempel
    May 10 (Reuters) - Appian Corp  APPN.O  shares soared and
Pegasystems Inc  PEGA.O  shares tumbled on Tuesday after a
Virginia jury ordered Pegasystems to pay its software rival
$2.04 billion in damages for misappropriating trade secrets.
    The damages award issued on Monday by the Fairfax County
Circuit Court jury followed a seven-week trial, and may be the
largest in Virginia's history, Appian said.
    In morning trading, Appian shares were up $14.86, or 34.5%,
at $57.88, while Pegasystems fell $25.88, or 39.3%, to $40.05.
    Appian, based in McLean, Virginia, alleged in its May 2020
lawsuit that Pegasystems retained an employee of a government
contractor from 2012 to 2014 to access its software, helping it
to improve its own products and better train its sales force.
    It said Pegasystems, based in Cambridge, Massachusetts,
referred internally to the contractor as a "spy" and to its
scheme as "Project Crush," with some employees using bogus
credentials to fool Appian into providing access.
    Appian said the jury found the misappropriation willful and
malicious, which could enable it to recoup legal fees. 
    Pegasystems said it disagreed with the verdict, which it
said resulted from "significant error," and will ask the trial
judge to set it aside. It also said it will vigorously pursue an
appeal that could take years.
    The damages award included $1 for a violation of the
Virginia Computer Crimes Act, Pegasystems said.
    In 2021, Appian posted an $88.6 million net loss on $369.3
million of revenue, while Pegasystems lost $63 million on
revenue of $1.21 billion, regulatory filings show.
    Appian general counsel Christopher Winters said in a
statement: "The award of substantial damages to Appian is
entirely appropriate given the nature and extent of what
Pegasystems did." 

 (Reporting by Jonathan Stempel in New York
Editing by Matthew Lewis)
 ((jon.stempel@thomsonreuters.com; +1 646 223 6317; Reuters
Messaging: jon.stempel.thomsonreuters.com@reuters.net))