TCS appeal against $420M trade secrets verdict moves to higher court

Tata Consultancy Services’ appeal against the $420 million verdict in a trade secrets suit filed by US software firm Epic Systems has moved to a federal appeals court, after it was upheld by a lower court.

Epic had filed the lawsuit against TCS in 2014 alleging that the IT services company had stolen its intellectual property. In 2016, Epic won a jury award of $940 million. In 2017, the Wisconsin court judge lowered the amount of the award to $420 million to comply with caps on punitive damages in such cases. In January 2018, TCS said it made a $440 million letter of credit available to US software firm Epic Systems.

Last week, the Wisconsin judge, who initially heard the case and reduced the verdict amount, upheld the verdict following an initial appeal by TCS.

On Friday, TCS filed a notice of appeal with the Seventh Circuit Court in Chicago, a source with knowledge of the matter told ET.

“We had prepared for this possible development and we filed a notice of appeal on the same day. We have strengthened our legal team with the addition of Sidley Austin,” the source added. Sidley Austin in a global lawfirm with over 2000 attorneys. The source added that the employees who were responsible had also violated the Tata Code of Conduct and had been terminated.

Appellate cases can take a year or more as the parties in the case are given time to present both their sides and the time taken also depends on the caseload of the bench.

"TCS believes that the facts and evidence presented in court do not support the penalty imposed. We have filed an appeal against the order in the higher court, and are confident of a favourable outcome,” Vish Iyer, vice president and global head of legal and corporate affairs at TCS’ told ET in an emailed statement.

“We are unwavering in our commitment to ethics, compliance and stringent IP protection. TCS did not misuse or derive any benefit from Epic’s documents and will defend its position vigorously,” Iyer added.

Epic Systems had not responded to a request for comment, sent outside regular business hours, at the time of going to press.

Epic had claimed that TCS employees were brought on as consultants to a Kaiser Permanente Sunnyside Medical Center in Portland, Ore., to help implement an Epic system there and took more than 6,000 documents containing Epic's system development information by creating a fake user account. The user pretended to be an employee of the hospital and did not disclose that he was a consultant, the lawsuit said.