TCS fined Rs 1,600 crore by the US court on complaint of this US-based company, here’s the company’s BSE filing

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 has been passed in a case filed by Computer Sciences Corporation (CSC), which has merged with DXC Technology Company (DXC), alleging misappropriation of its trade secrets before United States district court.
TCS informed the court order to the Stock Exchange Board of India (SEBI) in a BSE filing. It added it will appeal against the court order 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 judgement passed by United States District Court, Northern District of Texas, Dallas Division, details of which are provided in Annexure A.”

Details from TCS’ BSE filing

Giving details about the lawsuit filed by CSC, the BSE filing says, “In a suit filed by Computer Sciences Corporation (CSC)/DXC Technology Company (DXC) against the Company, alleging misappropriation of its trade secrets:
* The Court ordered that the Company is liable to CSC for $56,151,583 in compensatory damages and $ 112,303,166 in exemplary damages.
• The Court also assessed that the Company is liable for $25,773,576.60 in prejudgment interest through June 13, 2024.
• The Court also passed certain injunctions and other reliefs against the Company.
“The court ordered that the company is liable to CSC for $56,151,583 in compensatory damages and $112,303,166 in exemplary damages,” the Mumbai-based software services company said in a regulatory filing.
Responding to the court ruling, the Tata group company said that the judgement won’t have any major adverse impact on its financials and operations. TCS asserted that it has strong arguments on the matter and intends to defend its position through a review petition/appeal to the appropriate court. “The Company believes that it has strong arguments against the Judgement and is taking necessary steps to protect its interest through review/appeal. The Company believes that the Judgement has no major adverse impact on its financials and operations,” the BSE filing said.

What is the trade secret case against TCS

In 2019, CSC, which later became part of DXC, sued TCS for allegedly misusing its software after licensing it to a Transamerica subsidiary. TCS had secured a $2 billion contract with Transamerica the previous year. The suit accused TCS of exploiting 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.
Furthermore, Transamerica terminated its decade-long agreement with TCS prematurely in June 2023. Following a legal defeat and claim from Epic Systems, TCS accounted for a $125 million provision in the December quarter.