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US Court Cuts TCS Fine From $940M to $420M in Epic Lawsuit

A US court slashed compensatory and punitive damages TCS must pay Epic for the 2016 trade secret lawsuit by more than half.

Epic lawsuit

Source: Thinkstock

By Kate Monica

- Earlier this week, a US court cut the compensatory and punitive damages that major IT company Tata Consultancy Services (TCS) must pay Epic Systems for a trade secret lawsuit by more than half.

The Western District Court of Wisconsin issued an opinion that TCS should be ordered to pay $420 million of a $940 million fine as a result of the lawsuit filed by Epic in April of 2016.

“Partially granting TCS motion, the court significantly reduced the compensatory and punitive damages of USD 940 million awarded by the July verdict in April 2016, to USD 420 million,” TCS said in a regulatory filing.

The Indian multinational IT service, consulting, and business solutions company is one of the largest IT services brands worldwide. The Mumbai-based IT company stated the court order will not impact its second quarter financial results in any way and expressed possible intentions to appeal the decision.

“The company has received legal advice to the effect that the order and the reduced damages awarded are not supported by evidence presented during the trial and a strong appeal can be made to superior court to fully set aside the jury verdict,” a TCS representative said in a statement.

In 2016, Epic filed a complaint in Wisconsin district court against TCS for alleged theft of proprietary information used to advance a competing health IT product. Epic alleged a TCS employee working as a consultant at Kaiser Foundation Hospitals had accessed Epic’s implementation, integration, and testing support portal—Epic UserWeb—to download more than 6,477 documents and 1,687 unique files from an IP address outside the United States.

“The vast majority of the stolen data was not required for TCS to provide consulting services to Epic’s customer," stated Epic in the filed complaint. "To the contrary, much of the data wrongfully taken from Epic, if used improperly, would provide an unfair development and design advantage for TCS’s competing medical management software called Med Mantra."

The filed complaints included a total of twelve actions including computer fraud and abuse, misrepresentation, and breach of contract.

In 2016, Epic provided the following information about the allegedly stolen documents:

“[T]he documents downloaded by TCS personnel included, among other things, documents detailing over twenty years of development of Epic’s proprietary software and database systems, including programming rules and processes developed to produce optimal functionality of Epic’s software; documents that decode the operation of its source code that would otherwise be unusable to those outside of Epic; and information regarding Epic’s system capabilities and functions, including procedures for transferring data between customer environments, rules related to information collection, methods for limiting access to patient records, and processes for converting customer data, all of which reveal decades of work with its customers to determine the functionality desirable or required for Epic to provide successful products to those customers.”

Epic alleged these downloaded Epic documents were not necessary for the TCS employee to fulfill his role as a Kaiser consultant. Furthermore, Epic alleged the TCS employee used Kaiser credentials to gain access to UserWeb instead of disclosing his role as a consultant.

"The TCS employee appears to have intentionally misrepresented himself as a Kaiser employee when he knew that was a false representation for the purpose of gaining customer-level access authorization to Epic’s UserWeb," stated the Wisconsin-based health IT company.

In response, TCS asserted it “did not misuse or derive any benefit from Epic’s documents and plans to defend its position vigorously before the trial judge as well as in appeal.”

TCS second quarter results will be announced on October 12. 

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