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Top court rejects TCS appeal of punitive damages

November 22, 2023

The US Supreme Court rejected an appeal by Tata Consultancy Services Ltd. and confirmed $140 million in punitive damages.

TCS announced the court’s decision in a regulatory filing on Nov. 21. The global IT services giant petitioned the Supreme Court in a case brought against it by Epic Systems Corp. — a software firm providing electronic medical records. The case alleged TCS had improperly taken confidential information and trade secrets.

Incidents alleged in the case took place from 2012 to 2014 when TCS employees accessed Epic’s confidential customer web portal without authorization and downloaded thousands of documents containing Epic trade secrets, according to court records.

“Armed with this stolen information, TCS created a ‘comparative analysis’ outlining the differences between its software and Epic’s. TCS then used this analysis to try to persuade one of Epic’s largest customers to abandon Epic in favor of TCS,” court records said.

A district court jury initially ruled in favor of Epic and awarded the company $240 million in compensatory damages and $700 million punitive damages. The district court lowered the compensatory damages by $100 million to a total of $140 million. In addition, the punitive damages were ultimately also lowered to $140 million after an appeal by TCS to the Seventh Circuit.

Punitive damages are designed to deter individuals and companies from committing similar deeds in the future.

TCS had appealed to the Seventh Circuit for a second time before appealing to the Supreme Court.

TCS in its regulatory filing said it plans to make a balance provision of approximately $125 million in its financial statements as an exceptional item for its third quarter and nine months ending 31 December.

SIA has contacted TCS and Epic Systems for further comment.