Explained: Why TCS has to pay out $140 million in damages to a US enterprise

Explained: Why TCS has to pay out 0 million in damages to a US enterprise
Created by Aashish Aryan
, Edited by Explained Desk | New Delhi |

Current: August 23, 2020 12:12:58 pm

TCS can continue to attractiveness its scenario in advance of higher courts in the US, and existing its assert on why its software is not very similar to that of Epic Systems’. (Express Image by Janak Rathod/File)

A US appeals court docket on Friday (August 21) upheld compensatory damages of $140 million against Tata Consultancy Products and services (TCS) in an intellectual assets lawsuit submitted by Epic Units Corp. The Verona, Wisconsin-dependent company experienced claimed that TCS employees had stolen trade secrets and techniques belonging to the firm although doing the job on a challenge for them.

What was the situation against TCS?

In 2014, TCS and its subsidiary Tata The united states Global Corporation had been hired by Epic to enable set up its systems at a healthcare facility in Portland, Oregon, United States. In October of that 12 months, Epic alleged that TCS staff members who were doing work on internet site at the medical center had unlawfully obtained awareness of trade tricks and mental attributes of the former.

Primarily based on the info allegedly stolen by TCS workforce, TCS experienced designed a different software package which was a “rip-off” of the first program, Epic alleged. The company also submitted a lawsuit from TCS for allegedly stealing its intellectual assets.


In April 2016, a Wisconsin jury found TCS responsible, and awarded $240 million in compensatory damages to Epic, and a different $700 million in punitive damages.

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Subsequently, a decide in Wisconsin brought the costs imposed on TCS down from $940 million to $420 million, such as $140 million in compensatory damages and $280 million in punitive damages.

On Friday, the US Court of Appeals, 7th Circuit, Chicago, upheld the award of compensatory damages of $140 million, but requested the reduce courtroom to rethink the punitive damages of $280 million imposed on TCS.

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What are intellectual home rights in the US?

The US Office of State has its personal intellectual house (IP) enforcement agency which makes sure that the IP legal rights of US-primarily based businesses are guarded throughout the environment. The company seeks to discourage accessibility to counterfeit and pirated items that can harm individuals, make certain that the interests of American IP rights holders are safeguarded overseas, and promote IP defense and enforcement as important conditions for economic development.

Aside from this, the United States Patents and Logos Office environment protects the mental assets rights of folks and organizations, as effectively as the trade tricks of companies.

The agency defines a trade solution as “a system, pattern, compilation, plan, system, method, procedure or process”, which can give a organization an “opportunity to receive an economic edge over opponents who do not know or use it”.

Any violation of either IP rights or trade insider secrets of American businesses can end result in the awarding of punitive damages, as very well as the seizure of properties of the organization that is accused of thieving these rights or techniques.

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All these kinds of elements, irrespective of whether physical or computer software, seized by the organizations then remain in the custody of the court docket right up until the issue is determined.

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What does TCS have to say in this?

TCS has maintained that the scenario submitted towards it has no material evidence, and that it did not “misuse or derive any profit from downloaded files from Epic Systems”. However, this is not the only circumstance of its variety involving TCS.

In 2019, yet another computer software company, Computer system Sciences Corp (CSC) took TCS and its US subsidiary to court for stealing emblems and other mental residence software program. In a assertion released at the time, CSC experienced said that relatively than investing time and assets to create application which could less than the intricate insurance policies method of the US, TCS was “accessing and working with CSC’s computer software supply code and documentation and its private, proprietary and trade top secret information”.

What takes place next for TCS?

TCS can however attraction its situation ahead of greater courts in the US, and existing its declare on why its program is not related to that of Epic Systems’.

The company has in the previous explained that it respects the mental property rights of the purchasers and companions it works with, and has no tolerance for any infringement. Nevertheless, if the increased courts also rule towards TCS, the corporation may possibly confront difficulties with its initiatives in the US likely ahead.

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