US Court Upholds $194 Million Penalty Against TCS

The United States Court of Appeals for the Fifth Circuit has upheld the damages imposed on Tata Consultancy Services (TCS) in the trade secrets lawsuit filed by DXC Technology Company, earlier known as Computer Sciences Corporation (CSC). 

In a disclosure, TCS said it is evaluating various options, including further review and appeal before the appropriate courts, and intends to “vigorously defend its position.”

The Appeals Court has also set aside an earlier injunction issued by the United States District Court for the Northern District of Texas. 

That injunction had restricted TCS from using certain CSC software and confidential materials. With the order now vacated, these restrictions are no longer in force while the District Court reassesses the matter.

A major part of the dispute concerns TCS’s work for Transamerica. 

Under Transamerica’s agreements with CSC, TCS was given limited permission to access CSC’s Vantage and CyberLife systems to support the insurer’s technology transformation. 

CSC later argued in court that TCS went beyond what was allowed and used CSC’s software and confidential information in ways not permitted under those agreements. 

The District Court said CSC had raised genuine issues of fact on this point, allowing the claim to proceed.

The original judgement had found TCS liable under the Defend Trade Secrets Act of 2016 and ordered the company to pay CSC about $56.15 million in compensatory damages, $112.30 million in exemplary damages, and $25.77 million in prejudgment interest through June 13, 2024. 

TCS disclosed this ruling last year, saying it believed it had “strong arguments against the Judgement” and intended to pursue review or appeal. 

The company also said the ruling would not have a major adverse impact on its financials or operations.

The District Court’s detailed memorandum opinion from 2023, had denied TCS’s motion for summary judgment and its attempt to exclude CSC’s damages expert. 

It also struck several of TCS’s defenses, including failure to state a claim, lack of trade secrets and consent, and ruled in CSC’s favour on defenses such as laches, failure to mitigate and unclean hands. 

Other defenses, such as equitable estoppel, waiver and acquiescence, were left to be decided at trial.

TCS had also argued that the exemplary damages were “legally excessive” and should be reduced or set aside.

The Appeals Court rejected this argument and upheld the entire damages awarded by the District Court.

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