TCS manages to get Epic System trade secret suit fine reduced to $140 mn

Information technology (IT) services company Tata Consultancy Services (TCS) has lost a trade secrets suit against Epic Systems Corporation and has been asked to pay $140 million in damages.

TCS said that it is exploring options available to it, as it believes that there is no evidence of misuse of Epic information by the company, adding that it will defend its position before the relevant court, according to a disclosure to market exchanges.

"The US Court of Appeals, 7th Circuit, Chicago, returned a verdict on the appeal filed by TCS, reducing the damages award. 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," TCS said in the statement to Bombay Stock Exchange.

The case pertains to the allegation that Mumbai headquartered TCS used Epic's information for the development of its own hospital management system “Med Mantra’ which was implemented for a large hospital chain in India in 2009.

TCS has reported a net profit of more than Rs 7,000 crore during the first quarter of the current financial year and the financial damages will not have much of a material impact on its bottom line. However, this does dent the image of the country's largest software exporter. The company had posted a marginal increase of 0.4% in revenue to Rs 38,322 crore during the June quarter.

After a jury trial in 2016, TCS said that Epic's claims of theft of trade secrets are unsupported by the evidence presented during the trial adding that it did not misuse or derive any benefit from downloaded documents from Epic System’s user-web portal.

In 2017, Western District Court of Wisconsin, USA had significantly reduced the compensatory and punitive damages of $940 million awarded by the Jury verdict in April 2016, to $420 million.