A US District Court has fined Tata Consultancy Services (TCS) a total of $194.2 million (about Rs 1,600 crore) on charges of alleged misappropriation of trade secrets. The order against TCS was passed in a case filed by Computer Sciences Corporation (CSC), which has since merged with DXC Technology Company (DXC), alleging misappropriation of its trade secrets before the United States District Court. TCS has informed the court order to the Stock Exchange Board of India (SEBI) in a BSE filing and stated that it will appeal against the court order and file a review petition.
Details of the Lawsuit
The lawsuit filed by CSC, now merged with DXC, accused TCS of misusing its software after licensing it to a Transamerica subsidiary. TCS had secured a $2 billion contract with Transamerica in 2018. The suit alleged that TCS exploited the software access granted to 2,200 Transamerica employees, who were transferred to TCS, to learn about CSC’s software internals and create a rival 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.
TCS’s Response and Financial Impact
TCS has stated that the judgment will not have a major adverse impact on its financials and operations. The company believes it has strong arguments against the judgment and intends to defend its position through a review petition or appeal to the appropriate court. TCS has also accounted for a $125 million provision in the December quarter following a legal defeat and claim from Epic Systems.
It is not believable that a Company like TCS known for its ethics could misappropriate the Trade Secrets of CXC….