Gideon Korrell Discusses Legal Impact of $2B Pegasystems Trade Verdict Being Overturned

The Supreme Court of Virginia issued a landmark decision in Pegasystems Inc. v. Appian Corp., reversing a $2.036 billion trade secret judgment. The Court found that Appian failed to clearly define its trade secrets and lacked sufficient evidence of misappropriation under the Virginia Uniform Trade Secrets Act (VUTSA).

As legal expert Gideon Korrell explains, the ruling emphasizes a fundamental principle in trade secret law: “Without specifically identifying trade secrets and showing how they were misused, a claim cannot stand.”

Background: Competing Platforms and a Shared Contractor

Appian and Pegasystems are rival companies offering low-code software platforms for business process automation. In 2012, developer Youyong Zou worked with Appian through a staffing agency and also provided consulting services to Pegasystems.

Appian alleged that Zou's overlapping roles allowed Pegasystems to access and exploit Appian’s proprietary technology. A jury agreed and awarded over $2 billion in damages, which the trial court upheld. However, the Virginia Supreme Court overturned the verdict on appeal, citing failures in how Appian defined and proved its claims.

Core Issue: Trade Secrets Must Be Clearly Defined

The Court’s central concern was Appian’s failure to identify its trade secrets with reasonable particularity. According to precedent, a plaintiff must provide enough detail so the court can determine:

·         What the secret is,

·         Whether it is legally protected,

·         Whether it was misappropriated.

Instead of offering technical descriptions, Appian listed vague categories like:

·         Its “tempo” user interface,

·         Performance debugging tools,

·         Code deployment features,

·         Object structure designs.

These descriptions were too general. The Court found that Appian did not specify what was secret or how its features differed from industry norms.

“Functional descriptions are insufficient,” notes Gideon Korrell, “if they don’t point to confidential, valuable technical content.”

Legal Requirements: Failure on All Three Fronts

To prevail under VUTSA, a plaintiff must prove:

1.      The existence of a trade secret

2.      Misappropriation of that trade secret

3.      Damages caused by the misappropriation

1. No Clear Trade Secret Identified

Appian relied heavily on expert testimony and general product comparisons. But this did not replace the need for specific details. The Court emphasized that experts cannot define the trade secret on behalf of the plaintiff.

There was also little evidence that Appian took strong measures to protect the information beyond standard contractual terms.

2. Weak Evidence of Misuse

Appian’s case hinged on the assumption that Zou passed confidential knowledge to Pegasystems. However, the Court found no proof of direct use—no copied code, no documents, and no evidence of secret transfer.

Strategy documents referencing Appian were seen as competitive analysis, not misappropriation.

“Speculation is not a substitute for proof,” the Court concluded.

3. No Proven Damages

Since Appian failed to prove the existence or use of a trade secret, the damages model—based on assumed misappropriation—collapsed.

As Korrell explains, “Courts cannot uphold verdicts when foundational legal requirements are missing.”

Broader Impact on Trade Secret Litigation

This decision delivers a strong message to both plaintiffs and defendants in trade secret cases:

·         Big verdicts require specific proof

·         Expert opinion can’t fix vague claims

·         Suspicion is not evidence

For plaintiffs, the case shows the importance of:                   

·         Precisely defining the secret early in the case

·         Separating what is unique from what is public knowledge

·         Demonstrating actual use of the secret

·         Proving efforts to keep it confidential

For defendants, it highlights a strong defense strategy: challenge the clarity of the alleged trade secret and demand real evidence of use.

 

Conclusion: Clarity Is Crucial in Trade Secret Cases

The Virginia Supreme Court's reversal of the $2 billion judgment has reshaped expectations for trade secret litigation. The decision emphasizes that plaintiffs must do more than present broad theories or expert opinions. Courts will require precision in describing trade secrets, clear proof of misuse, and measurable damages grounded in solid evidence.

Gideon Korrell notes that the Pegasystems ruling demonstrates how even major jury awards cannot stand if the legal fundamentals are not satisfied. For companies in competitive industries, this case is a reminder that success in trade secret litigation depends not just on technical merit but also on legal precision and evidentiary discipline.