India's largest IT services company Tata Consultancy Services (TCS) on Tuesday, November 21, said the company faced a setback as the United States Supreme Court declined the company's petition to appeal against the US Court of Appeals' decision.

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The ruling upholds the punitive damages award of $140 million in the EPIC Systems Corporation case, originally passed by the District Court of Wisconsin, TCS said in a regulatory filing

TCS now plans to include a balance provision of approximately $125 million as an exceptional item in its financial statements for the third quarter and nine months ending December 31, 2023.

The matter relates to a US grand jury order that slapped two Tata Group companies — TCS and Tata America International Corp — with a $940-million fine in a trade secret lawsuit filed against them by EPIC in April 2016.

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EPIC Systems had accused TCS and Tata America International Corp, in a lawsuit filed in October 2014 which was amended in January and December, 2015, of "brazenly stealing the trade secrets, confidential information, documents and data" belonging to EPIC. In its lawsuit, EPIC had said TCS took that data while consulting for its customers.

EPIC said it "recently learned from an informant" that TCS employees have been "fraudulently accessing" EPIC's software beyond what the consulting contract required — and using EPIC's software to improve their own competing product. One TCS employee account, which was used in India and several US locations, downloaded 6,477 documents, according to EPIC.

On April 16, 2016, TCS made a disclosure to the stock exchanges regarding a US court verdict related to an intellectual property rights case with EPIC Systems.

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The original award of punitive damages was later reduced to $280 million, but in August 2021, a US Court of Appeals held that the punitive damages award of $280 million was “constitutionally excessive,” and reduced it to $140 million in 2022.

Shares of Tata Consultancy Services Ltd ended at ₹3,510.30, down by ₹9, or 0.26%, on the BSE.

(Edited by : Shoma Bhattacharjee)

First Published:Nov 21, 2023 7:04 PM IST