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US court halves fine imposed on TCS for allegedly stealing software code from another firm

Wisconsin-based, privately-held healthcare software firm Epic Systems had alleged that a TCS employee had illegally downloaded its documents, which amounts to breach of contract and an Intellectual Propriety (IP) infringement. Epic had accused TCS employees of “brazenly stealing trade secrets, confidential information, documents and data”, and using this to build its own healthcare system.

In a lawsuit filed in October 2014, Epic Systems said it had “recently learned from an informant” that TCS employees had been “fraudulently accessing” Epic’s software beyond what the consulting contract required and using it to improve their own competing product.They claimed that an account belonging to a TCS employee had downloaded 6,477 documents.The account was allegedly used from India and the US.

In 2016, the jury of the US Court had held TCS guilty of stealing trade secrets, confidential information, documents and data from the complainant. It had asked the Mumbai-based firm to pay $240 million (around Rs 1,566 crore) for intellectual property infringement, and $700 million (approximately Rs 4570 crore) for punitive damages. The Tata Group company had then denied the charges and said it would appeal against the verdict in higher courts.

But a court in the United States has slashed by over half the amount it had earlier fined Indian IT company Tata Consultancy Services for allegedly stealing healthcare-related software code from American firm Epic Systems, TCS said on Sunday 1st October 2017. The company will now  have to pay a fine of $420 million (around Rs 2,742 crore), it said in an exchange filing.

On Sunday 1st October 2017, the Indian tech giant said the reduced damages are not supported by evidence, and it will contest the fine again for damages on the alleged misuse of its trade documents.

TCS repeated its earlier stance that it “did not misuse or derive any benefit” from downloaded documents from the user web portal of Epic System. The company also said that the order will not have an impact on the company’s financial results for the second quarter of 2017-18, to be declared on October 12.

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