In a trade secret suit filed by American medical software firm Epic Systems, an appeals court in the USA upheld compensatory damages of $140 million while reassessing the punitive loss of $280 million against Tata Consultancies Services (TCS).
The 7th Circuit of the US Court of Appeal, Chicago, ruled that $280 million in punitive compensations were unlawfully unreasonable and reassessed the punitive damage to the Court of Appeal. According to an exchange filing by the biggest software service provider in India, the court however reaffirmed the award of compensatory damages of $140 million.
TCS granted a letter of credit to Epic Systems for $440 million in 2018. The US trade secret infringement case of TCS was brought before a US Federal Court of Appeal in May 2019 by the US tech company Epic Systems.
“TCS evaluates the options available as it claims that TCS has not shown any abuse of EPIC knowledge,” said in the company’s bond statement to the stock exchanges. TCS must firmly maintain its stance before the court concerned.
The case of the US Corporation dates from 2014. TCS’s intellectual property had been accused by Epic Systems. In 2016, a jury found TCS guilty of negligence worth 940 million dollars and paid Epic Systems damages. The Wisconsin court took the cost down to 420 million dollars a year after the initial verdict. This was done for punitive damage to these cases to adhere to a defined legal cap.
Epic argued that TCS employees have been brought to the Kaiser Permanente Sunnyside Medical Center in Portland for a consultation to support the implementation of the Epic software and that it has taken more than 6,000 documents with development information from Epic through the creation of a fake user account. The customer said he was a staff member of the hospital and didn’t tell him to be a consultant, said the complaint.
In May 2020, the SEBI issued a notice to TCS for not reporting damages properly to investors in the 2016 case of Epic Systems. The financial statements of 18 April 2016 indicate that as a result of contingent liability (as a result of the “Notes to Accounts”) Rs.6.227.03 crore or $940 million are claims for damages issued by the Jury. In its related October 1, 2017 filing, TCS reported that compensatory and punitive damages had been substantially reduced to $420 million from the Court.
“The loss is very large, compared to TCS (consolidated) RS 24,292 crore net profit for FY16. In order to allow investors to determine the effect of the jury verdict on the lists’ finances, the TCS disclosures to the stock exchanges on 16 April 2016 should have demonstrated prominently the extent of the harm, “SEBI said on 28 May.
