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TCS Asked To Pay A Massive $940 Million In The US Over Allegations Of Software Stealing, Set To Re-Appeal

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In what could mark the biggest ever legal fine slapped on an Indian IT company in the US, Tata Consultancy Services has just been slapped with a massive $940 Million fine by a Wisconsin legal Jury. The charges? Stealing healthcare software from an American company named Epic Systems.

The company has issued a statement, promising to defend its position and claiming that the decision and particularly the size of damages awarded, are dispropportionate to the company’s offense.

While TCS respects the legal process, the jury verdict on liability and damages was unexpected as the company believes they are unsupported by the evidence presented during trial. TCS plans to defend its position vigorously in appeals… TCS appreciates the trial judge’s announcement… that he is almost certain he will reduce the damages award.

Remark upon the hope of reduction of fines in the last line. Seems to me as if the company seems to have reconciled itself to a decision against it, and just wants to control the damages arising out of a negative decision.

The complaint comes from Epic Systems, which is a US based electronics medical records vendor. The company builds software for healthcare companies to manage their billing, insurance benefits management and referral services.  The company has accused TCS of stealing documents and other confidential information associated with its platform and using it to launch a rival called Med Mantra — Yes, the same system which is deployed in the Apollo chain of hospitals.

Apparently, TCS consultants working for Kaiser Permanente — one of the largest healthcare providers in the US — requested and were granted access to Epic syatems, which has Kaiser as its client. However, they were also forced to sign a privacy contract and were supposed to keep all the information private.

As per Epic, the contractors accessed Epic’s internal network and instead of doing what they should have been, went and downloaded details pertaining to Epics platform, thus helping TCS build a competing product called Med Mantra.

Phew! Talk about extra-proactive employees!

Commenting on the topic, an Epic statement said,

The vast majority of the stolen data was not required for TCS to provide consulting services to Epic’s customer. 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.

Luckily for TCS, it announced its quarterly financial results on Monday, so the fallout from its legal worries wont be spilling into business, at least not now.

The amount of fine is the largest an Indian company working abroad as been ordered to pay — indeed $700 million is in punitive damages alone — and the company, unless it wins the reappeal, wont find paying it to be a pleasant task. Not to mention the blow its reputation has taken, as a result of this case.

Lets hope the company’s re-appeal — which according to US law — should happen within 30 days of the original decision, goes well. While a complete annulment of the charges would be the best possible outcome, a significant lowering in the $700 million damages amount would be pretty great too.

Stay Tuned!

A bibliophile and a business enthusiast.

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