A jury awarded Appian $2.036 billion in damages, finding Pegasystems had engaged in "willful and malicious" trade secret misappropriation. The verdict raises questions about the future of Pegasystems for some.
A software developer who worked on Appian software under a government contract was accused of spying on the company for more than a decade, sharing trade secrets with Pegasystems under an operation dubbed "Project Crush." Appian claimed Pegasystems hired the developer to divulge details about its software and provide videos of the development environment. The project was outed by a former Pegasystems employee, leading Appian to sue and win the largest payout in the history of Virginia's court system.
Pegasystems referred to the developer internally as a "spy," according to a press release Appian issued Tuesday announcing the verdict.
"It's shocking in the stupidity," said Will McKeon-White, an analyst at Forrester. "You don't spy on people, and you don't put 'spy' in writing."
In addition to the espionage, the press release detailed how Pegasystems employees used fake identities to access trial versions of Appian's software, a low-code system used to build apps and workflows. It also stated that Pegasystems CEO Alan Trefler accessed the system, using the alias Albert Skii.
Pegasystems made its intent to challenge the verdict. Lisa Pintchman, vice president of corporate communications, said the company "strongly disagrees with the claims and the recent verdict."
"We have strong grounds to overturn this result, and we are actively pursuing all legal options," she said.
Pegasystems' future is uncertain
Matthew Calkins, Appian's CEO, found out about the extent of Project Crush in the spring of 2020 -- about 10 ten years after the spying began -- when a former employee tipped him off. "I was amazed not only by the audacity of it, but by how long it had been running," he said in an interview with SearchSoftwareQuality.
For Calkins, the most important part of the story isn't the dollar amount, but how emphatic the jury was about Pegasystems' inappropriate behavior.
"What I take away most strongly from this verdict is their certitude and condemnation," he said. In addition to the multi-billion-dollar award, the jury verdict found that Pegasystems had engaged in willful and malicious misappropriation of trade secrets.
Pegasystems isn't required to pay the amount of the judgment until it has exhausted all appeals, according to the press release.
For some, the outcome raises questions about the future of the company. "Will they now have to redevelop lots of their platform and apps from scratch, or it all ends with this huge fine?" said Predrag Jakovljevic, principal industry analyst at Technology Evaluation Centers. "If the latter, surely they will suffer in terms of reputation, and it will be a major hit on their finances."
Larry Carvalho, an independent analyst at RobustCloud, agreed that the verdict might have repercussions for the vendor's customers.
"I expect that Pegasystems will seek a settlement and try to move forward," he said.