Legal Proceedings.
+Added: Pegasystems Litigation
+Added: On May 29, 2020, we filed a civil complaint against Pegasystems, Inc.
+Added: (“Pegasystems”), and Youyong Zou, a Virginia resident, in the Circuit Court for Fairfax County, Virginia, alleging claims for trade secret misappropriation, violation of the Virginia Computer Crimes Act (“VCCA”), tortious interference, and statutory business and common law conspiracy.
+Added: Pegasystems Inc.
+Added: & Youyong Zou, No.
+Added: 2020-07216 (Fairfax Cty.
+Added: As alleged in our complaint, the claims arose out of the efforts by Pegasystems to obtain and use our trade secrets through Zou, who worked on a federal program as an employee at Serco, Inc.
+Added: (“Serco”), and had access to our software and documentation exclusively to work on Serco projects involving the federal government, as well as through Pegasystems’ own employees representing themselves as potential customers or Appian partners rather than Pegasystems employees.
+Added: The conspiracy claims were dismissed on January 13, 2022.
+Added: After fact discovery closed in early 2022, on January 31, 2022, the court held a seven-day plea in bar jury trial on Pegasystems’ affirmative defense that we did not file our trade secret and VCCA claims within the relevant statute of limitation periods.
+Added: At the conclusion of trial, the court ruled that, based on the evidence presented, there was no jury question and granted our motion to strike Pegasystems’ plea in bar as to our trade secret misappropriation claim.
+Added: The court granted Pegaystems’ plea in bar only with respect to conduct relevant to the VCCA claim that occurred prior to May 29, 2015.
+Added: As a result of the judge’s order, we may proceed to a jury trial on the merits of our claims of trade secret misappropriation, violations of the VCCA after May 29, 2015, and tortious interference.
+Added: The jury trial on our claims is set to commence on March 21, 2022.
+Added: If Pegasystems is found liable on any of our claims, we may be entitled to an award of damages.
+Added: Presently, we are seeking damages for unjust enrichment from Pegasystems over the period of 2012 through 2021, plus attorney’s fees, interest, and other forms of monetary relief for Pegasystems’ conduct.
+Added: Litigation by its nature is highly uncertain, and we cannot predict the outcome of the trial.
+Added: We believe we have a substantial chance of prevailing at trial and, if we did so, we could obtain a substantial award of damages from the jury, although a jury has a high degree of discretion to award an amount it deems just and appropriate.
+Added: Any judgment in our favor would be subject to appeal, and therefore the timing and actual recovery of a damages award is subject to further uncertainty.
+Added: Separately, on July 3, 2019, Pegasystems filed a claim against us and BPM.com, Inc., a market analyst company, in U.S.
+Added: District Court for the District of Massachusetts alleging, among other things, that we had engaged in false advertising by re-publishing a study by BPM.com comparing us favorably to Pegasystems and by failing to disclose we commissioned the study.
+Added: Pegasystems Inc.
+Added: & Business Process Management Inc., No.
+Added: 1:19-cv-11461 (D.
+Added: We have responded to Pegasystems’ complaint denying Pegasystems’ allegations and making certain affirmative defenses.
+Added: We believe Pegasystems’ claims are without merit, and we are engaged in vigorously defending against them.
+Added: Our motion to dismiss Pegasystems’ complaint was granted in part and denied in part on December 19, 2019.
+Added: We have also filed counterclaims against Pegasystems for false advertising, alleging numerous marketing and advertising materials used by Pegasystems, including that a report purportedly authored by Jim Sinur, a former industry analyst, were false and/or misleading and, in the case of the Sinur report, Pegasystems failed to disclose that it had commissioned the report.
+Added: We also made a claim for defamation against Pegasystems based on public statements by Pegasystems’ executives.
+Added: Pegasystems’ motions to dismiss our counterclaims have been denied, except with respect to one marketing document.
+Added: At this point, no trial date has been scheduled in the Massachusetts case, expert discovery is ongoing, and the parties have not yet filed their motions for summary judgment.
+Added: Pegasystems is seeking damages in the form of disgorgement of our profits
+Added: related to the use of the BPM.com report.
+Added: We do not believe we obtained any profits as a result of the BPM.com report.
+Added: On our false advertising and defamation claims, we are seeking damages for both our own lost profits and disgorgement of Pegasystems’ profits as measures of damages.
+Added: Our claims for damages in this case exceed those of Pegasystems.
+Added: Given the case is still in its preliminary stages and the inherent uncertainty of litigation, we are unable to assess the likelihood we will succeed in defending against Pegasystems’ claims or prevailing on our own counterclaims or, further, the amount of damages either party might obtain if it receives a judgment in its favor.
+Added: If we prevail on our counterclaims, and Pegasystems does not prevail on its claims, or we receive an award of damages in excess of the amount awarded to Pegasystems, Pegasystems could be liable to us for damages.
+Added: Similarly, if Pegasystems prevails on its claims, and we do not prevail on our counterclaims, or we do not receive a substantial award of damages for our own counterclaims, we could be liable for damages to Pegasystems.
+Added: Because the Massachusetts case is in an earlier stage, the Virginia case is likely to reach final judgment before the Massachusetts case.
+Added: Other Matters
From time to time, we may become involved in legal proceedings or be subject to claims arising in the ordinary course of our business.
−Removed: We are not presently a party to any legal proceedings that, if determined adversely to us, would individually or taken together have a material adverse effect on our business, operating results, financial condition, or cash flows.
+Added: Other than as disclosed elsewhere in this Annual Report, we are not presently a party to any legal proceedings that, if determined adversely to us, would individually or taken together have a material adverse effect on our business, operating results, financial condition, or cash flows.
Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management time and resources, and other factors.
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