A federal judge and jury in Los Angeles awarded LA-based TechForward Inc. $27 million in its lawsuit against Best Buy. TechForward, a used electronics startup, sued the consumer electronics giant last year for breach of contract and misappropriation of trade secrets after Best Buy allegedly hired the small firm to help develop its Guaranteed Buyback Program, then modified that program and kept using it without paying TechForward.

According to TechForward, the startup was hired to develop software to calculate buyback values for electronic devices and to implement what would be called the “Guaranteed Buyback Program” in Best Buy stores. The program gave customers who bought new devices at Best Buy the right to trade them in for store credit whenever new versions were released.

After months of working with TechForward, Best Buy said it had decided to walk away from the program it was working on with TechForward and develop its own. According to the lawsuit, Best Buy actually used TechForward’s technology to develop the new program without paying for it.

According to Best Buy, the change in programs was due to customer input. After determining that its customers were most interested in the right to trade in old cell phones for new devices, the company closed the Guaranteed Buyback Program to new customers and instituted a new loyalty program called “Trade-In Plus,” which only applies to cellphones and mobile devices.

As a result of Best Buy’s breach of contract, TechForward says, the startup was forced out of business. Meanwhile, other nationwide consumer electronics stores have implemented similar programs.

The jury awarded TechForward $22 million in compensation for the contract breach and misappropriation of trade secrets. The federal judge added $5 million in punitive damages to punish Best Buy. Best Buy denied any wrongdoing and vowed to appeal.

Source: StarTribune, “Best Buy to pay $27 million in trade secrets case,” Steve Alexander and Janet Moore, Dec. 6, 2012