Trade secrets remain a primary source of competitive advantage in technology, manufacturing, and retail. The confidential know‑how often reflects years of investment and iteration. Loss of secrecy erodes pricing power and can shorten product life cycles. Litigation becomes the last resort when voluntary protection fails. The 2025 verdict against Walmart shows that juries still view deliberate misuse as serious corporate misconduct.
The following analysis reviews the dispute between Zest Labs and Walmart, the governing law, and the lessons for managers and counsel.
Please note this blog post should be used for learning and illustrative purposes. It is not a substitute for consultation with an attorney with expertise in this area. If you have questions about a specific legal issue, we always recommend that you consult an attorney to discuss the particulars of your case.
Executive Summary
On 13 May 2025 an Arkansas federal jury found that Walmart had willfully misappropriated produce‑shelf‑life technology developed by Zest Labs and awarded $222.7 million—$72.7 million in compensatory damages plus $150 million in punitive damages.
The case reached a second jury because the court vacated an earlier $115 million judgment returned on 9 April 2021. Walmart successfully moved for a new trial under Federal Rules 59 and 60(b)(2) after uncovering proof that Zest Labs’ trial counsel knew—yet failed to disclose—that Walmart had filed a related 2019 patent application. Judge James Moody Jr. concluded the nondisclosure prejudiced the first jury and set the matter for a full retrial. The second jury again found misappropriation and willfulness and more than doubled the damages.
The verdict underscores three themes:
- Documented secrecy measures + clear economic value = large awards.
- Willful copying invites punitive damages even against deep‑pocket employers.
- Companies evaluating outside technology must record independent development—or risk exposure.
The Dispute
Zest Labs created “Zest Fresh,” a platform that predicts produce shelf life using temperature sensors and machine‑learning models. In 2017 the startup began NDA‑protected discussions with Walmart. During technical sessions Zest disclosed database schemas, aging‑factor algorithms, and proprietary performance metrics.
Walmart later launched “Eden,” an internal tool that grades produce using similar inputs. At trial, Zest showed side‑by‑side comparisons of code, variable names, and threshold values. Walmart denied copying and pointed to public literature on produce spoilage. The jury accepted Zest’s narrative.
Procedural History
The litigation formally commenced in 2018 when Zest Labs filed its complaint in the U.S. District Court for the Eastern District of Arkansas, accusing Walmart of misappropriating the “Zest Fresh” post‑harvest produce‑quality platform. Discovery was intensive, spanning 2019 and 2020, and included millions of pages of technical documents, more than twenty depositions, and competing source‑code inspections.
The first jury trial opened on 29 March 2021 in Little Rock. After seven days of testimony and a day of deliberations, the jury returned a $115 million verdict on 9 April 2021—$60 million in compensatory damages, $50 million in exemplary damages under the Defend Trade Secrets Act and Arkansas law, and $5 million for breach of an NDA. Final judgment was entered on 12 April 2021.
In post‑verdict discovery, Walmart unearthed internal e‑mails showing that Zest’s trial counsel had known about—but never disclosed—the retailer’s unpublished 2019 patent application that covered aspects of the challenged technology. Citing this nondisclosure, Walmart moved under Federal Rules 59 and 60(b)(2) for a new trial. Judge James Moody Jr. granted the motion on 22 December 2023, vacating the entire 2021 judgment and ordering the case be retried from scratch.
The second trial ran for twelve court days between 28 April and 13 May 2025. The new jury heard fresh liability and damages evidence, including additional expert testimony on causation and market impact. It again found that Walmart willfully misappropriated Zest’s trade secrets and returned a heightened award of $72.7 million in compensatory damages and $150 million in punitive damages, for a total of $222.7 million.
Following the verdict, Judge Moody entered a five‑year permanent injunction barring Walmart from deploying the misappropriated software without a license and set a briefing schedule for fees and post‑trial relief. Walmart has announced its intent to appeal to the Eighth Circuit, while Zest has moved for prejudgment interest and attorneys’ fees.
Legal Framework
The Defend Trade Secrets Act (2016) and the Arkansas Trade Secrets Act were both pleaded. A trade secret must (i) derive independent economic value from not being generally known and (ii) be subject to reasonable secrecy measures. Misappropriation covers acquisition by improper means or unauthorized use. When the plaintiff proves willfulness, punitive damages up to 2× compensatory are available.
Zest Labs met the secrecy‑measure requirement with signed NDAs, version‑control logs, and password policies. The jury found willfulness based on overlapping code, internal Walmart emails referencing Zest slide numbers, and draft Walmart patent claims citing Zest materials.
Damages Analysis
The jury’s award came in two distinct tranches. First, it assessed $72.7 million in compensatory damages to restore Zest Labs to the position it would have occupied had the misappropriation never occurred. Zest’s forensic‑accounting expert arrived at that number by blending (i) a reasonable‑royalty calculation using comparable IoT produce‑monitoring licenses, (ii) disgorgement of the incremental cost savings Walmart realized by deploying its Eden algorithm instead of paying to license Zest Fresh, and (iii) the diminution in Zest’s enterprise value that investment bankers tied to Walmart’s accelerated market entry. Sourcing Walmart e‑mails that applauded per‑store spoilage reductions and lining them up against Zest’s own projection models, the expert persuaded jurors that anything less would undercompensate the startup. Walmart’s rebuttal expert urged a figure closer to $10 million, but the panel clearly credited the higher but‑for valuation.
Second, the jury imposed $150 million in punitive damages after finding that Walmart acted willfully and maliciously. Both the Defend Trade Secrets Act and the Arkansas Trade Secrets Act authorize up to 2× compensatory damages where willfulness is proven. The $150 million figure yields a ratio of roughly 2.06 : 1, comfortably within Supreme Court guideposts on due‑process limits. During deliberations, jurors reportedly focused on internal Slack chats comparing Eden code to Zest’s and on Walmart draft patent claims lifted from Zest slide decks—evidence they considered especially aggravating.
Taken together, the $222.7 million total approximates what Zest Labs has poured into R&D since 2010, highlighting that trade‑secret verdicts can rival blockbuster patent awards. The judgment will accrue post‑judgment interest at the federal statutory rate, and Zest has asked for an additional $18 million in prejudgment interest and $12 million in attorneys’ fees—exposure that, if granted, could lift Walmart’s total liability to well over a quarter‑billion dollars.
Business Implications & Action Points
The jury’s decision offers corporate leaders a concrete checklist for safeguarding competitive know‑how. First, segregate evaluation and development teams. Adopting clean‑room protocols—where one group examines outside technology under an NDA while a separate, fire‑walled team codes the company’s own solution—creates a clear evidentiary barrier. Contemporaneous lab notebooks and commit logs can later show a judge or jury that any overlap is coincidental, not copied.
Second, lock down technical access. Multi‑factor authentication, least‑privilege permissions, network segmentation, and immutable logging make it measurably harder for insiders to exfiltrate trade secrets and far easier for investigators to trace what happened if data does leak.
Third, treat training as a living program, not a binder. Annual refresh sessions that reference high‑profile verdicts such as Zest Labs v. Walmart turn abstract policy into concrete personal risk, boosting retention and compliance.
Fourth, elevate trade‑secret stewardship to the board. Quarterly dashboards tracking incident rates, audit findings, and key‑control metrics help directors fulfil their oversight duties and signal that confidentiality is mission‑critical.
Finally, prepare—and rehearse—an incident‑response playbook. A coordinated forensic, legal, and communications plan executed in the first 48 hours often determines whether a breach becomes a controlled event or a multimillion‑dollar fiasco.
Litigation Trends
Remote work, AI‑assisted reverse engineering, and increased jury familiarity with IP disputes all amplify exposure. Courts and juries continue to impose patent‑sized awards where intent is clear.
Conclusion
The Zest Labs v. Walmart saga shows that robust confidentiality governance is no longer optional. Agreements alone cannot prevent misuse. Firms that combine disciplined development practices, technical safeguards, and a culture of secrecy are best positioned to innovate without fear—and to defend themselves if litigation becomes unavoidable.
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Further Reading
- Walmart to pay tech company $222M over trade secret misappropriation, https://www.grocerydive.com/news/walmart-222-million-Zest-labs-lawsuit-court-ruling-trade-secret-misappropriation/748221/
- Top Strategies to Safeguard Tech Trade Secrets | Insight – Baker McKenzie, https://www.bakermckenzie.com/en/insight/publications/2025/04/top-strategies-to-safeguard-tech-trade-secrets
- Trade Secrets 2025 | Global Practice Guides – Chambers and Partners, https://practiceguides.chambers.com/practice-guides/trade-secrets-2025
- On Behalf of Agri-Tech Startup Zest Labs, Inc., Bartko Pavia’s Patrick M. Ryan Obtains $222 Million Jury Verdict Against Walmart – Business Wire, https://www.businesswire.com/news/home/20250514194280/en/On-Behalf-of-Agri-Tech-Startup-Zest-Labs-Inc.-Bartko-Pavias-Patrick-M.-Ryan-Obtains-%24222-Million-Jury-Verdict-Against-Walmart
- 7 Steps to Protecting Your Trade Secrets – USPTO, https://www.uspto.gov/sites/default/files/documents/CRS-LA-OBrien-trade-secrets.pdf