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US court trims fine on TCS to $140 million in Epic Systems suit

Venkatesh Ganesh Mumbai | Updated on August 21, 2020 Published on August 21, 2020

2 Tata group entities were earlier slapped with a $940-m fine

A top US court has halved the penalty to be paid by TCS in its ongoing case with Epic Systems, which reflects IP protection measures taken by the software exporter.

The US Court of Appeals, 7th Circuit, Chicago, returned a verdict on the appeal filed by TCS, reducing the damages to $140 million. The Court held that the punitive damages award of $280 million is constitutionally excessive and directed the Trial Court to reassess the punitive damages. The Court upheld the compensatory damages award of $140 million.

In October 2014, TCS was slapped with a lawsuit and asked to pay Epic $940 million, which was later reduced to $280 million. TCS is still contesting the claims. TCS has reiterated that there is no evidence of misuse of EPIC’s information by TCS and it will continue to contest the case at the relevant court.

The matter relates to a US grand jury order that slapped two Tata group companies — Tata Consultancy Services and Tata America International Corp — with a $940-million fine, in a trade secret-related lawsuit filed against them by Epic Systems.

Epic had accused TCS and Tata America International Corp, in a lawsuit filed in October 2014 in US District Court in Madison, which was amended in January and December 2015, of “brazenly stealing trade secrets, confidential information, documents and data”.

In the Epic Systems case, the US-based healthcare software company had implemented its healthcare management system in the Kaiser Permanente, healthcare service provider. TCS was hired to test the system implementation. In the course of implementation, TCS employees had restricted access to Epic’s documents.

Despite restricted access, Epic Systems alleged that TCS employees used a Kaiser Permanente employee’s credentials to steal over 6,000 documents.

Industry watchers opine that there is more smoke than fire, looking at the court’s ruling. “The judgment clearly reflects that TCS has not benefited from the allegations made by Epic Systems and should not be compared to the high profile IP infringement cases that Silicon Valley companies have indulged in,” said Pareekh Jain, CEO at Pareekh Consulting, who was formerly with outsourcing consultant ISG.

 

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Published on August 21, 2020
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