Walmart was ordered to pay agricultural technology company named Ecoark $115 million because it was found guilty of misappropriating trade secrets. Ecoark also owns its Zest Labs. It decided to sue Walmart in August of the year 2018. The lawsuit was filed in the US District Court for the Eastern District of Arkansas. However, the agricultural technology company claimed that the biggest supermarket chain had deliberately wrongfully used and disclosed several Zest trade secrets which were related to technology for reducing food waste.
A jury at the US District Court for the Eastern District of Arkansas observed, “Walmart is liable for three claims, including trade secrets misappropriation and failure to comply with a written contract.” The jury, therefore, awarded $65 million in compensatory damages in favor of Ecoark. In addition to compensatory damages, $50 million was also ordered against Walmart as punitive damages for its willful and malicious conduct. “We are grateful that the jury understood and acknowledged the evidence that supported Zest’s claims,” said Zest CEO Peter Mehring, adding: “This outcome further validates the unique and valuable solutions that Zest Labs built, and underscores the strength of our IP.”
The suit dealt with Walmart’s Eden. Eden is a technology system that helps in tracking the freshness of food products along the supply chain to the retail stores of Walmart. “We were surprised and concerned by how similar Walmart’s Eden description was to Zest Fresh,” said Mehring in the year 2018, after Ecoark filed the suit. Zest Fresh is the flagship product of the company. It works as a monitoring agent for food supplies in real-time when they are transported.
Zest Labs said that it had a multi-year business relationship with retail chain Walmart until 2017. It was that period through which Walmart acquired almost every important information from Zest Fresh which it was bound by a mode of a contract to keep the information confidential in every possible manner. “We are happy that we had our day in court and that the jury found that Walmart misappropriated our trade secrets and breached the agreement between the parties. The damages awarded were strongly supported by the evidence,” said Ecoark CEO Randy May.
May continued: “The jury verdict also allows us to file motions seeking attorneys’ fees and costs. We do not believe Walmart has any basis to appeal the verdict and doing so will only confirm that the judgment was proper.” Possibilities are there that Walmart goes for an appeal against the ruling of US district court as one of their spokesperson was seen as saying: “Walmart values its business relationships and respects the IP rights of others. We have policies in place to prevent the inappropriate use of third-party assets. We believe the jury’s verdict is excessive, not supported by the facts, and should be set aside. We plan to file post-trial motions and are considering our next steps.”
Trade secrets as suggest by its name are a secret behind any trade which should be kept secret even as professional ethics. Spilling it out can harm any ongoing trade whether small or big. It’s just like a recipe for any dish. So let’s see what precedent this decision sets for everyone.
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