Debasis Mohapatra
Bengaluru, June 15, 2024
A US court in a verdict has imposed a penalty of around $194 million on Tata Consultancy Services on charges of misappropriation of trade secrets.
The Tata Group company in an exchange filing on Friday said that the IT major would appeal against the verdict in higher court.
“We hereby inform you that the company has received an adverse judgement passed by the United States District Court, Northern District of Texas, Dallas Division, details of which are provided in Annexure A. The company believes that it has strong arguments in the matter and intends to defend its position through review petition/appeal to the appropriate court,” the company said in the exchange filing.
Giving details of the verdict, TCS said that in a suit filed by Computer Sciences Corporation (CSC)/DXC Technology Company (DXC) against the company, alleging misappropriation of its trade secrets, the court has ordered that TCS is liable to CSC for $56,151,583 in compensatory damages and $112,303,166 in exemplary damages.
The court also said that TCS is liable for $25,773,576.60 as interest charges.
However, TCS maintained that it has strong arguments against the verdict and would appeal against such imposition in higher court. It also informed that the judgement has no major adverse impact on its financials and operations.
What the allegation is all about?
In 2019, Computer Sciences Corp filed charges against TCS alleging that the Indian IT firm had stolen its trade secrets. The claim of the lawsuit was that the TCS licensed its software to Transamerica’s subsidiary Money Services Inc. In 2018, TCS won a deal worth $2 billion from Transamerica. The allegations said that a total of 2,200 employees of Transamerica were rebadged by Tata in 2018. These employees were allegedly used to get access to the software of CSC to get information on its source code, along with other proprietary data. The purpose was to construct a competing life insurance platform, the lawsuit mentioned.
According to CSC’s charges, its deal with TCS was meant for third-party administration. But, TCS allegedly got access to the source code of its proprietary systems, which were later used to enhance the TCS BaNCS software.
From the beginning of the lawsuit, TCS has denied all allegations and defended his actions terming all charges as baseless.
