Lessons Learned From 2022's Trade Secret Verdicts

• Published date: 09 March 2023
• Subject Matter: Intellectual Property, Trade Secrets
• Law Firm: Proskauer Rose LLP
• Author: Mr Steven Pearlman, Joseph O'Keefe, Daryl Leon, Alexandra Oxyer and Alyssa M. Cook

Before closing the book on 2022, we look back at the most significant verdicts issued in trade secret trials this past year. In 2022, several juries awarded extraordinary verdicts to plaintiffs. These verdicts suggest a growing trend in damages theories and illustrate the importance of expert testimony in both the prosecution and defense of trade secret misappropriation cases. The cases also highlight considerations related to the scope of the definitions of trade secrets alleged starting at the outset of a case. For companies pursuing or defending against trade secret actions in 2023, looking to these verdicts and the theories that helped persuade a jury or judge can help guide strategy from the outset of the case through trial.

1. Sky-High Verdicts Reveal a Growing Trend in Damages Theories

2022 saw substantial verdicts in trade secret actions across various industries. Most noteworthy was the verdict in Appian Corp. v. Pegasystems Inc., No. 2020-07216 (Va. Cir. Ct. Fairfax Cty. May 9, 2022), in which the jury awarded a staggering $2 billion in favor of plaintiff Appian for the misappropriation of trade secrets in violation of the Virginia Trade Secrets Act and Virginia Computer Crimes Act, in addition to willful and malicious misappropriation.

Appian alleged that Pegasystems conspired with a former Appian employee who possessed a copy of Appian's software to disclose the former employee's knowledge of the software. Pegasystems then used the information to create its own product to compete with Appian. Appian presented evidence that Pegasystems had used an individual they referred to as "our spy" to glean secrets from a trial of Appian's software.

Other sizable trade secrets verdicts from 2022 include:

• Versata Software Inc. v. Ford Motor Co., No 2:15-cv-10628 (E.D. Mich. Oct. 26, 2022), in which the jury awarded Versata Software $105 million for its breach of contract and misappropriation of trade secrets claims against Ford Motor Co. on the theory that Ford had misappropriated software developed by Versata utilized in managing how Ford vehicles are assembled;
• Coda Development SRO v. Goodyear Tire & Rubber Co., No. 5:15-cv-1572 (N.D. Ohio Sept. 19, 2022), in which the jury awarded Coda Development $64 million for the misappropriation of trade secrets involving self-inflating tires after Coda Development and Goodyear had discussed a potential collaboration;
• Comet Technologies USA Inc. v. XP Power LLC, No 20-cv-06408 (N.D. Cal. Mar. 23, 2022), in which Comet Technologies was awarded $40 million for the misappropriation of trade secrets related to the manufacture of semiconductor chips, which Comet alleged occurred after XP hired away Comet employees who were aware of the proprietary technology; and
• Epic Systems Corp. v. Tata Consultancy Services, Ltd. No. 14-cv-748 (W.D. Wisc. July 1, 2022), in which Epic...