The Virginia Supreme Court issued its opinion on January 8 2026, rejecting Pegasystems’ motion to dismiss the trade‑secret lawsuit and remanding the case for a new trial. The court held that Pegasystems’ use of a “spy” to obtain Appian’s proprietary software and documentation violated the Virginia Computer Crimes Act, and it affirmed that Appian’s claims of misappropriation remain viable.
The “spy” in question, Youyong Zou, was an employee of a government contractor who provided Appian’s software and documentation to Pegasystems. Pegasystems internally referred to him as “our spy.” The court found that Zou’s actions constituted a violation of the Virginia Computer Crimes Act, a finding that Pegasystems did not appeal and therefore remains confirmed.
The Supreme Court identified several procedural errors in the original trial. It found that the jury had received an erroneous instruction that mischaracterized the burden of proof, and that the trial court improperly shifted the burden of proving damages onto Pegasystems. The court also noted that evidence regarding the number of people with legitimate access to Appian’s trade secrets was excluded as “not relevant,” a decision the court deemed incorrect. These errors prompted the court to order a new trial.
Pegasystems maintains that the information obtained through Zou was publicly available and that Appian failed to keep it secret. The company argues that the trial court limited its ability to present evidence and defend itself, and it expects that a retrial will allow it to introduce evidence that was previously precluded and to shift the burden of proof back to Appian.
Appian’s General Counsel Jaye Campbell said the company will present the evidence of alleged theft to a new jury and remains confident that its claims will be properly addressed. The remand keeps the $2.04 billion verdict from the 2022 Fairfax County jury alive, exposing Appian to potential liability and significant legal costs. The outcome of the retrial could materially affect Appian’s financial statements and investor perception, while Pegasystems may benefit from a reduced exposure to damages but still faces ongoing litigation costs.
The ruling underscores the importance of robust trade‑secret protection and compliance with state computer‑crime statutes. For Appian, the remand signals that the legal battle will continue, potentially draining resources and diverting management attention. For Pegasystems, the decision removes the threat of a $2 billion judgment but confirms a violation of the Virginia Computer Crimes Act, which could impact its reputation and future hiring practices. The case will likely remain a focal point for investors monitoring legal risk and intellectual‑property strategy in the software industry.
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