TCS Fined $194 Million by US Court: What You Need to Know

In a significant development, Tata Consultancy Services (TCS) has been fined a whopping $194.2 million (approximately Rs 1,600 crore) by a US District Court. The court’s ruling comes in response to a lawsuit filed by Computer Sciences Corporation (CSC), which has since merged with DXC Technology Company (DXC). The lawsuit alleges that TCS misappropriated CSC’s trade secrets.

TCS fined $194 million by US court

According to a BSE filing, TCS has informed the court of its intention to appeal the ruling and file a review petition. The company believes that the judgment will not have a major adverse impact on its financials and operations.

The lawsuit, filed by CSC, alleges that TCS misused software licensed to a Transamerica subsidiary. TCS had secured a $2 billion contract with Transamerica in 2018. The lawsuit claims that TCS exploited the software access granted to 2,200 Transamerica employees, who were transferred to TCS, to learn about CSC’s software internals and create a rival insurance platform.

Court rules in favor of CSC

The court found that TCS had improperly accessed and used confidential data from DXC’s insurance management software, resulting in a $70 million penalty for trade secret misappropriation and an additional $140 million for deliberate infringement.

TCS has stated that it will take necessary steps to protect its interests through a review/appeal to the appropriate court. The company believes that it has strong arguments against the judgment and is confident that it will not have a major adverse impact on its financials and operations.

TCS to appeal court ruling

In a related development, Transamerica terminated its decade-long agreement with TCS prematurely in June 2023. This follows a legal defeat and claim from Epic Systems, which resulted in TCS accounting for a $125 million provision in the December quarter.

The ruling has significant implications for TCS and the IT industry as a whole. As the company prepares to appeal the ruling, it remains to be seen how this will impact its operations and financials in the long run.

The ruling has significant implications for TCS and the IT industry