Andy Dean - Fotolia

Tata Consultancy Services to appeal damages in IP case

TCS will appeal against the damages set in a US court case concerning alleged intellectual property infringements

Indian IT services giant Tata Consultancy Services (TCS) has been ordered to pay $940m to a software firm because one of its employees used credentials from a previous job to access confidential information.

TCS denies that it benefited from the information, and is expected to appeal against the damages.

A US federal jury made the order after an employee was found to have accessed a web portal of health industry software firm Epic Systems that contained confidential intellectual property (IP). About 6,000 documents were downloaded, according to court documents.

But TCS questioned the size of the damages: “While TCS respects the legal process, the jury’s verdict on liability and damages was unexpected as the company believes they are unsupported by the evidence presented during the trial.”

The services firm said it had not misused or derived any benefit from documents downloaded from Epic Systems’ web portal and, as such, it planned to appeal.

“TCS did not misuse or benefit from any of the said information for development of its own hospital management system, which was implemented for a large hospital chain in India in 2009,” it said.

According to reports, the trial judge announced that he was almost certain he would reduce the damages award.

One source told Computer Weekly the case would reflect badly on Indian IT services firms in the US. “The finding that a TCS member of staff took the information is really bad for the Indian IT industry in the US,” he said.

Read more about Indian IT service providers in US

Outsourcing consultant Peter Schumacher said jumping to conclusions should be avoided: “As this case moves through the courts, we will see if the facts of the case are what is being alleged by Epic.

“The evidence shows that many of these suits lack merit and a high percentage are dismissed. The high dismissal rate is partly related to the ambiguous definition of what constitutes a trade secret, which is virtually any subject matter of information.

“Resolving these disputes is tricky and can drag out over years. Generally, the longer the resolution takes, the more likely the court will rule against the plaintiff.”

Separately, TCS reported sales of $16.54bn in its latest financial year, a 7.1% increase over the previous 12 months. Profit was $3.69bn, 14.8% higher than the previous year.

Read more on Offshore IT services