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Fifth Circuit Affirms $40 Million Trade Secrets Verdict

May 15, 2013

Today, the Fifth Circuit U.S. Court of Appeals affirmed a verdict of more
than $40 million in a trade secrets misappropriation case, Wellogix, Inc.
v. Accenture, Inc.
, No. 11-20816 (5th Cir. May 15, 2013).

The facts of the case are straightforward. Wellogix developed software to
sell to companies in the oil and gas industry. The software was designed
to help them manage complex projects. Wellogix contracted with Accenture
for Accenture to market the software, and shared its source code and other
technology with Accenture, subject to a confidentiality agreement. Later,
however, Accenture, SAP, and BP worked together to develop a competing
software, and accessed Wellogix’s technology and source code to do so.
Wellogix sued all three companies — BP, SAP, and Accenture. Only
Accenture went to trial. After a nine day trial, the jury awarded
Wellogix $26.2 million in actual damages, and $68.2 million in punitive
damages. The district court judge, the Honorable Keith Ellison, entered
judgment on the jury verdict, with the exception of remitting the punitive
damages award to the amount Wellogix had requested at trial, $18.2
million. Accenture appealed.

The Fifth Circuit affirmed the judgment against Accenture in all respects.
It found that there was sufficient evidence that Accenture had indeed
misappropriated Wellogix’s trade secrets. As for the actual damages
award, Wellogix presented proof that venture capital firms had valued
Wellogix’s worth at approximately $26.2 million before Accenture’s
misappropriation, and zero after the misappropriation. Wellogix also
presented evidence that Accenture itself had indicated in documents that
the BP work alone was worth more than $20 million, so long as it could
keep Wellogix out of it. An expert testified that Wellogix’s sole worth
was from the technology that had been misappropriated, and evidence showed
that during the relevant time, Wellogix was the only company with the
technology at issue. Regarding punitive damages, the court found there
was sufficient evidence that Accenture acted with malice, citing to a
plethora of e-mails Accenture employees wrote boasting of its ability to
“harvest” Wellogix’s technology and its desire to interfere with
Wellogix’s business relationships, even though it knew that its conduct
was legally questionable.

This decision is a clear reminder to companies that using another entity’s
trade secrets is a bad business practice, not to mention illegal, and that
juries and judges will punish such conduct harshly.

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