TCS Fined a Whopping $194 Million for THIS? Shocking!
TCS, a major Indian IT company, was ordered by a US court to pay $194 million for misappropriating trade secrets from DXC Technology (formerly CSC). This includes actual damages, punitive damages, and interest. TCS plans to appeal the decision.
CONTENTS: TCS Fined a Whopping $194 Million for THIS?
TCS loses trade secrets case
TCS Fined a Whopping $194 Million for THIS?
India’s largest IT services exporter, Tata Consultancy Services (TCS), announced on Friday, June 14, that it received an adverse judgment from the United States District Court, Northern District of Texas, Dallas Division. This judgment pertains to a case filed by Computer Sciences Corporation (CSC), now known as DXC Technology Company (DXC), accusing TCS of misappropriating its trade secrets, as stated in a stock exchange filing.
TCS hit with $194M penalty
The court has determined that TCS is responsible for a sum totaling $194.2 million. This includes $56,151,583 in compensatory damages, $112,303,166 in exemplary damages, and $25,773,576.60 in prejudgment interest. Furthermore, the court has issued specific injunctions and other remedies against the company.
TCS fined $194M for trade secrets theft
Tata Consultancy Services (TCS) has been ordered by a United States District Court to pay a total penalty of approximately $194.2 million (about Rs 1,600 crore) in a case involving allegations of misappropriation of trade secrets filed by Computer Sciences Corporation (CSC), now DXC Technology Company (DXC). According to a regulatory filing, TCS disclosed that the court directed it to pay $56,151,583 in compensatory damages and $112,303,166 in exemplary damages. Additionally, TCS is liable for $25,773,576.60 in prejudgment interest up to June 13, 2024.
TCS stated that despite the adverse judgment, it does not expect a significant adverse impact on its financials and operations. The court found TCS guilty of misappropriating trade secrets under the Defend Trade Secrets Act of 2016 of US law. TCS indicated it will vigorously defend its position through a review petition or appeal to the appropriate court.
TCS sued for trade secret theft
In 2019, Computer Sciences Corp, now DXC Technology, initiated a lawsuit against TCS alleging that TCS, after securing a $2-billion deal from Transamerica in 2018, utilized the access of 2,200 Transamerica employees to CSC’s software to gain insights into its source code and proprietary information, allegedly for developing a competing life insurance platform. The lawsuit contended that TCS’ agreement was solely for third-party administration and not for accessing CSC’s proprietary systems.
In November 2023, a US court jury concluded that TCS had improperly used confidential information related to DXC’s Vantage-One and CyberLife software, used for managing life insurance and annuity policies, to create a competing platform. The jury ruled that TCS owed DXC $70 million for misappropriating trade secrets and an additional $140 million due to the willful nature of the misuse.
Additionally, in June 2023, Transamerica prematurely terminated its 10-year contract with TCS. In TCS’s fiscal third quarter of FY24, ending December 2023, the company set aside a $125 million provision following legal setbacks, including claims from Epic Systems.
On Friday, TCS’s shares closed at Rs 3,831.95 on the BSE, marking a 1.17% decline from the previous close. The announcement regarding the legal developments came after the market hours.
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