Supreme Court of Virginia Agrees to Hear Appian Petition to Reinstate $2.036 Billion Verdict Against Pegasystems, Inc.

Rhea-AI Summary

Appian (APPN) announced that the Supreme Court of Virginia will hear its petition to reinstate the $2.036 billion judgment against Pegasystems (Pega) for trade secret misappropriation. The court granted the petition on all four issues raised regarding errors made by the Court of Appeals.

The original verdict stemmed from evidence showing Pega employed a 'spy' to analyze Appian's software internals, improve their product, and generate billions in revenue. The jury's unanimous decision followed seven weeks of testimony and extensive documentation.

While the Supreme Court will also hear Pega's cross-appeal arguments regarding evidence sufficiency, these claims were previously rejected by both trial court and Court of Appeals. Notably, Pega's violation of the Virginia Computer Crimes Act remains confirmed as they declined to appeal this ruling.

Positive

• Supreme Court of Virginia agreed to hear petition to reinstate $2.036B verdict
• Original jury verdict of willful trade secret misappropriation could be restored
• Pega's Virginia Computer Crimes Act violation remains confirmed and final

Negative

• Final outcome of appeals process remains uncertain
• Timeline for resolution is undefined
• Previous $2.036B judgment currently not in effect pending appeal

Insights

Legal Expert

The Supreme Court of Virginia's decision to hear Appian's petition marks a significant development in this high-stakes trade secret litigation. The court agreeing to review all four issues raised in Appian's appeal suggests legitimate judicial interest in examining whether the Court of Appeals erred in overturning the massive $2.036 billion judgment.

This represents a critical procedural victory for Appian, as most petitions for appeal are denied. Having their case heard by Virginia's highest court keeps alive the possibility of reinstating what would be one of the largest trade secret judgments in U.S. history. The court will now review whether legal errors occurred when the lower court reversed the jury's finding of willful and malicious misappropriation.

The stakes are extraordinarily high given that the potential judgment represents nearly 85% of Appian's current market capitalization. While Pega's cross-appeal will also be heard, it's noteworthy that their arguments regarding evidence sufficiency have already been rejected twice by lower courts.

It's particularly significant that Pega's violation of the Virginia Computer Crimes Act stands confirmed and final, providing Appian a partial victory regardless of this appeal's outcome. However, investors should recognize that supreme court proceedings typically take months to resolve, with no guarantee of success despite this procedural win.

Financial Analyst

This legal development creates a substantial upside opportunity for Appian shareholders. The potential reinstatement of a $2.036 billion judgment would be transformative for a company with just $2.38 billion market capitalization. To put this in perspective, Appian's entire annual revenue is approximately $532 million, making this potential award nearly 4x their yearly sales.

If ultimately successful, such a recovery would dramatically strengthen Appian's balance sheet, potentially enabling accelerated R&D investment, strategic acquisitions, or even capital returns to shareholders. The company currently holds about $240 million in cash and equivalents, so this judgment would represent an 8x increase to their cash position.

While legal proceedings of this magnitude typically face years of appeals and potential settlement negotiations, the mere possibility of recovery creates a valuable "lottery ticket" component to Appian's valuation. The market appears to be heavily discounting the likelihood of full recovery, creating an asymmetric risk-reward scenario for investors.

The Virginia Supreme Court accepting all four petition arguments signals more than a procedural formality. Though final outcomes remain uncertain, this development substantially increases the probability of at least partial reinstatement of damages. Investors should view this as incrementally positive while recognizing that legal timelines remain unpredictable and final resolution could still be years away.

MCLEAN, Va., March 7, 2025 /PRNewswire/ -- Appian announced today that the Supreme Court of Virginia agreed to hear its petition seeking to reinstate the $2.036 billion judgment against Pegasystems, Inc. ("Pega"). The petition, which raised four different errors made by the Court of Appeals, seeks to restore the jury's verdict of willful and malicious trade secret misappropriation. The petition was granted on each of the four issues. 

Appian originally brought the case to trial to ensure the protection of its intellectual property, including its trade secrets. The unanimous verdict from the jury was based on seven weeks of testimony from dozens of witnesses and thousands of pages of evidence introduced to show that Pegasystems employed a "spy" to analyze the inner workings of Appian's software, improve its own product, and generate billions of dollars in revenue based on its misappropriation.

"We are encouraged that the Supreme Court of Virginia has agreed to review our case. We look forward to being heard by the highest court in Virginia and remain hopeful the Court will reinstate the jury's verdict and corresponding damages, which were in line with the scope of wrongdoing found in this case and which we believe is the correct legal outcome," stated Christopher Winters, General Counsel of Appian.

The Supreme Court also agreed to hear Pega's cross-appeal issues, which presented arguments regarding the sufficiency of the evidence of trade secret misappropriation. Those arguments have been rejected by both the trial court and the Court of Appeals. The Virginia jury found Pegasystems violated the Virginia Computer Crimes Act, but Pegasystems declined to appeal that ruling below, meaning that the Virginia Computer Crimes Act violation by Pegasystems remains confirmed and final.

The petition will be subject to further briefing and argument in front of the Supreme Court of Virginia. Appian cannot predict the outcome of any appeals or the time it will take to resolve them.

Learn more about the Appian and Pega case here: https://appian.com/pega-verdict

Forward-Looking Statements

This press release includes forward-looking statements. All statements contained in this press release other than statements of historical facts, including statements regarding Appian's ability to collect on the judgment, the outcome of any appeal, and the timing of such matters, are forward-looking statements. All aspects of the case could be subject to further appeal by Appian or Pegasystems. Appian cannot predict the outcome of any appeals or the time it will take to resolve them. The words "anticipate," "believe," "continue," "estimate," "expect," "intend," "may," "will," and similar expressions are intended to identify forward-looking statements. These forward-looking statements are subject to a number of risks and uncertainties, including the risks and uncertainties set forth in the "Risk Factors" section of Appian's Annual Report on Form 10-K for the year ended December 31, 2024 filed with the Securities and Exchange Commission on February 19, 2025 and other reports that Appian has filed with the Securities and Exchange Commission. Appian is under no duty to update any of these forward-looking statements after the date of this press release to conform these statements to actual results or revised expectations, except as required by law.

About Appian

Appian is The Process Company. We deliver a software platform that helps organizations run better processes that reduce costs, improve customer experiences, and gain a strategic edge. Committed to client success, we serve many of the world's largest companies across industries. For more information, visit appian.com. [Nasdaq: APPN]

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SOURCE Appian

FAQ

What is the current status of Appian's $2.036 billion lawsuit against Pegasystems?

The Supreme Court of Virginia has agreed to hear Appian's petition to reinstate the $2.036 billion verdict, which was previously overturned by the Court of Appeals.

What were the original allegations in APPN's lawsuit against Pegasystems?

Appian alleged that Pegasystems employed a spy to analyze Appian's software internals, improve their product, and generate billions in revenue through trade secret misappropriation.

Has Pegasystems been found guilty of any charges in the Appian case?

Yes, Pegasystems was found guilty of violating the Virginia Computer Crimes Act, a ruling they didn't appeal and remains final.

What is the next step in APPN's legal proceedings against Pegasystems?

The case will undergo further briefing and arguments before the Supreme Court of Virginia, with timing and outcome uncertain.