TCS to take $125 million hit to Q3 earnings over US lawsuit

India's TCS to take $125 million hit to Q3 earnings over US lawsuit

India's largest IT services company Tata Consultancy Services (TCS) on November 21 said it will make a provision of $125 million as an 'exceptional item' in its third-quarter results in relation to a trade secret lawsuit filed by US-based Epic Systems.

The trade secret lawsuit was filed by Epic Systems against TCS and Tata America International Corp in 2014. The company had alleged the Tata Group companies of stealing its intellectual properties to develop its own, though it was contracted to implement Epic's healthcare software.

The US Supreme Court on November 20 rejected TCS' appeal against a verdict passed by the District Court of Wisconsin, upholding an order that includes $140 million in punitive damages, the company said in a release.

TCS was found guilty

Following the lawsuit in 2014, TCS was found guilty by a jury in 2016 and awarded damages of $940 million initially, to be paid to Epic Systems. After further hearings, a year later, the fine was reduced to $420 million, which included $280 million in punitive damages and $140 in compensatory damages.

The punitive damages were later held to be excessive after TCS appealed to the US Court of Appeals, 7th Circuit, Chicago, and the trial court was told to reassess it. This punitive damage was then reduced by the US District Court for Western District of Wisconsin to $140 million in July 2022.