Tata Consultancy Services Ordered To Pay US$210mn in CSC Code Theft Trial: Report

Moneylife Digital Team 28 November 2023

Economy & Nation

A Texas jury agreed that Tata Consultancy Services (TCS) had wilfully and maliciously misappropriated both source and confidential documentation of Computer Sciences Corp (CSC) by improper means and awarded CSC US$140mn (million) in damages, with another US$70mn tacked on for TCS's unjust enrichment, says a report.

However, the report from The Register , says, the champagne corks won't be popping at CSC just yet. "If the EPIC (EPIC Systems Corp) experience is anything to go by – the decision was appealed – there will likely be legal twists and turns aplenty before payments are made and the case is closed."

According to the report, in April 2019, CSC filed a complaint against TCS for its VANTAGE-ONE and CyberLife software platforms. "CSC had licensed these software platforms to Transamerica Corporation, a life insurance holding company, to whom Tata – used here to collectively refer to TCS and Tata America International Corp – began providing maintenance services."

In 2014, CSC and Transamerica signed off on a third-party access addendum that would allow Tata to alter CSC's software, but only for the benefit of its customer – Transamerica. "All was well until 2016 when Transamerica decided it needed to refresh its software. CSC and Tata both put in bids. CSC lost, and Tata won with its own software platform called BaNCS."

The circumstances got sticky at this point, not least because Tata hired more than 2,000 Transamerica employees. CSC alleged that these former employees had access to its code and documents and forwarded them on to the Tata BaNCS development team, the report says, adding, "The situation escalated in 2019, when a CSC employee was accidentally copied in on an email between Tata and Transamerica showing that Tata was accessing confidential information, according to CSC. The company then began legal proceedings," the report says.

In its complaint , CSC alleges that "TCS' copying of CSC's rate of return (an actuarial concept commonly known as ROR) source code for Vantage is the proverbial tip of the iceberg. Upon information and belief, TCS is engaged in an ongoing and wide-ranging effort to misuse its access to CSC's confidential and proprietary information, including CSC's source code, to develop its new BaNCS platform for the US."

Citing the example of EPIC Systems, the complaint filed by CSC is highly critical of TCS. It says, "Having learned nothing from the outcome of the Epic litigation or the massive judgment entered against it, TCS continues to improperly access, copy and make improper use of CSC's source code, trade secrets and proprietary information. In the absence of injunctive relief and other relief sought herein, TCS will pursue its true objective, which is to misappropriate the software, the knowledge, and the means to compete unlawfully with CSC."

In June this year, TCS mutually agreed with insurance provider Transamerica to end a US$2bn (billion) contract, citing reasons including a challenging macro environment, says a report from Reuters .

The 10-year contract, signed in early 2018, involved TCS working with US-based Transameria to enable the digitisation of more than 10mn policies into a single integrated platform.

Last week, the US Supreme Court rejected a petition by TCS to file an appeal against the orders passed by the US Court of Appeals, which confirmed the punitive damages award of US$140mn passed by the district court of Wisconsin.

Confirming the ruling, TCS, in a regulatory filing, says, "The Company intends to make the balance provision of approximately US$125mn in its financial statements as an exceptional item for the third quarter and nine months ending 31 December 2023."

Last year, the US Court of Appeals in the western district of Wisconsin passed an order confirming the US$140mn punitive damages slapped on TCS in the case filed by EPIC Systems. TCS has challenged the ruling before the Supreme Court. (Read: TCS Asked To Pay US$140mn Punitive Damages by US Supreme Court in EPIC Systems Case )

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