US retail giant Walmart has been ordered to pay more than $222m to technology start-up Zest Labs for allegedly stealing trade secrets, following a retrial in an Arkansas federal court.
The jury’s decision concluded that Walmart is liable for misappropriating trade secrets related to food preservation technology – an accusation that had been levelled by Zest.
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The technology startup was awarded $72.7m in compensatory damages and $150m in punitive damages.
The verdict was based on findings that Walmart improperly used Zest Labs’ trade secrets after the latter confidentially disclosed its proprietary Zest Fresh food preservation tech for reducing food waste under an agreement that included non-disclosure terms.
Zest Labs initiated legal action against Walmart in 2018, accusing the retailer of appropriating the process, which monitors the freshness of produce from farms to stores.
Zest Fresh process was expected to cut the amount of perishable food discarded by between 30% and 33%, Zest Labs manager Gary Metzger stated.
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By GlobalDataEvidence presented during the trial suggested that Walmart then shifted from being a customer of Zest Labs and became a competitor. It allegedly developed a similar technology using the trade secrets obtained from Zest and filed a patent for it without disclosure.
Gary Metzger stated: “Zest Labs developed groundbreaking technology aimed at addressing a significant humanitarian issue: food waste. But Walmart’s misuse of Zest’s trade secret has hindered our ability to achieve the necessary scale to make a substantial impact and help feed the world. This legal victory is a small but crucial triumph for small businesses that often face exploitation by larger corporations, robbing them of the opportunity to bring their innovative solutions to the market. It marks a significant step toward ensuring justice and fair play in the business world.”
Walmart maintains that its Eden produce-tracking technology was independently developed.
The retailing giant vows to appeal the ruling and states that Zest’s “unethical behaviour has compromised the integrity of this case from the start”.
