Best Buy Ordered to Pay $27M in Trade Secrets Case

Best Buy Ordered to Pay $27M in Trade Secrets Case

TechForward accused Best Buy of stealing its concept for a buy-back program; Best Buy said it “completely disagrees” with the size of the award in the case and plans to “vigorously challenge this verdict.”

California start-up TechForward, Inc., said Wednesday that it has been awarded $27 million in a trade secret case against Best Buy Company, Inc.

TechForward sued Best Buy in early 2011, accusing the Richfield-based electronics retailer of stealing its concept for a buy-back program and of backing out of a planned partnership.

TechForward claimed that it had developed a buy-back program called Guaranteed Buyback Plan, which was implemented at several companies, including Dell, RadioShack, and CompUSA. In 2008, it entered into a confidentiality and non-disclosure agreement with Best Buy to develop a program to sell its Guaranteed Buyback Plan in select Best Buy stores, the company said.

TechForward said that Best Buy used its trade secrets to launch its own buyback program without TechForward. The company filed its lawsuit shortly after Best Buy launched the program, which allows customers to sell back electronic devices for Best Buy gift cards. (Best Buy announced the launch of the program with a Super Bowl commercial featuring Justin Bieber and Ozzy Osbourne, TechForward said.)

Court documents filed last month indicate that a jury awarded TechForward $22 million in damages in the case. Earlier this week, U.S. District Court Judge Otis Wright, II, signed an order awarding TechForward an additional $5 million in “exemplary damages,” stating that the jury found Best Buy’s actions to be “willful and malicious.”

“We completely disagree with the size of the award, given the facts of this case, and intend to vigorously challenge this verdict through all appropriate and available means,” Best Buy said in an emailed statement provided to Twin Cities Business.

Meanwhile, TechForward co-founders Jade Van Doren and Marc Lebovitz said in a statement that they “are extremely pleased that the jury recognized Best Buy’s misconduct, and we hope this verdict puts large companies on notice that there are real consequences to illegally exploiting startup businesses like ours.”

Earlier this year, TechForward sold its assets to SquareTrade, Inc., an independent warranty company.

Best Buy is Minnesota’s third-largest public company based on revenue, which totaled $50.7 billion for the fiscal year that ended in March. For the quarter that ended November 3, the company reported a net loss of $13 million, or 4 cents per share, from continuing operations, on revenue of $10.8 billion.