A US District Court has fined Tata Consultancy Services (TCS) $194.2 million (approximately Rs 1,600 crore) for alleged misappropriation of trade secrets. The order stems from a case filed by Computer Sciences Corporation (CSC), now part of DXC Technology Company (DXC), in the United States District Court for the Northern District of Texas.
TCS disclosed the court order to the Stock Exchange Board of India (SEBI) in a BSE filing, stating it will appeal the decision and file a review petition. “Pursuant to Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, we hereby inform you that the Company has received an adverse judgment passed by the United States District Court, Northern District of Texas, Dallas Division, details of which are provided in Annexure A,” the filing read.
According to TCS’s BSE filing, CSC/DXC accused TCS of misappropriating its trade secrets, resulting in the following penalties:
– $56,151,583 in compensatory damages.
– $112,303,166 in exemplary damages.
– $25,773,576.60 in prejudgment interest through June 13, 2024.
– Additional injunctions and other reliefs.
Responding to the court’s ruling, TCS stated that the judgment would not significantly impact its financials or operations. The company expressed confidence in its legal position and plans to appeal. “The Company believes that it has strong arguments against the judgment and is taking necessary steps to protect its interest through review/appeal. The Company believes that the judgment has no major adverse impact on its financials and operations,” TCS stated in the filing.
The trade secret case dates back to 2019 when CSC, which later merged with DXC, accused TCS of misusing its software after it was licensed to a Transamerica subsidiary. TCS had secured a $2 billion contract with Transamerica the previous year. The suit alleged that TCS exploited the software access granted to 2,200 Transamerica employees, who were transferred to TCS, to understand CSC’s software internals and develop a competing insurance platform. The court found that TCS had improperly accessed and used confidential data from DXC’s insurance management software, resulting in a $70 million penalty for trade secret misappropriation and an additional $140 million for deliberate infringement.
Furthermore, Transamerica prematurely terminated its decade-long agreement with TCS in June 2023. Following a legal defeat and a claim from Epic Systems, TCS accounted for a $125 million provision in the December quarter.
