By Blake Brittain

Jan 8 (Reuters) - Software company Appian APPN.O on Thursday failed to convince the Supreme Court of Virginia to revive a $2 billion jury verdict it had previously won against rival Pegasystems PEGA.O over the alleged theft of its trade secrets.

The state's highest court affirmed a Virginia appeals court's decision to throw out the verdict, which had been the largest damages verdict in state history.

Spokespeople for the companies did not immediately respond to requests for comment on the ruling.

McLean, Virginia-based Appian said in a 2020 lawsuit that Pegasystems hired a contractor to steal confidential information from Appian's software platform in order to improve its products and better train its sales force. Appian alleged that Cambridge, Massachusetts-based Pegasystems referred internally to the contractor as a spy and to its scheme as "Project Crush," with employees using fake credentials to access Appian's software.

A jury in Fairfax County, Virginia state court determined in 2022 that Pegasystems misappropriated Appian's trade secrets with "willful and malicious" intent and ordered it to pay Appian nearly $2.04 billion. A state appeals court judge said in 2024 that the lower court had committed a "series of errors" related to jury instructions and evidence that required a new trial.

The Supreme Court of Virginia agreed Thursday that the instructions stated Virginia law inaccurately and that the trial court limited Pegasystems' evidence too strictly.

(Reporting by Blake Brittain in Washington)