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Tata Consultancy Services to pay $210 million in a trade secret row in the US

The court order directed TCS to pay DCX Technologies a total of $210 million, including $70 million for misappropriation of trade, and $140 million for ‘exemplary damages’ dealt to the latter.

We missed this earlier: Texas federal court in the US had ordered Tata Consultancy Services (TCS) to pay American information technology (IT) services company DCX Technology $210 million for misappropriating DCX’s trade secrets. According to a report by the Hindu Business Line, the case was originally filed by Computer Sciences Corporation (CSC) which merged with Hewlett Packard Enterprise services to form DCX.

CSC filed its complaint in 2019 and accused TCS of improperly accessing and using its insurance and annuity policy management software—Vantage and Cyberlife software systems—to develop similar products of their own and steal CSC’s customers.

So what exactly happened?

According to the complaint filed by CSC, it has been providing its software to a company called Money Services Inc. since 1994. As a part of the licensing agreement, CSC had provided the company with copies of Vantage, CyberLife, and Additional CSC Products software, including source code. In 2014, Money Services Inc. began using TCS’ services to maintain its IT services, this included maintenance of some of CSC’s software systems that resided on Money Services’ servers.

In January 2018, TCS announced that it was entering the U.S. Life, Wealth, and Insurance Market and that it was partnering with TransAmerica, MSI’s parent company. Soon after, it hired 2000 Transamerica employees who used to have access CSC’s software systems, these employees continued to have access to CSC’s source code even after they began working with TCS. CSC’s complaint said that TCS was using its employees’ access and knowledge of ,” source code, software documentation and other proprietary and confidential CSC information to develop TCS’ [banking software suite] BaNCS for the US.”

One financial hit after another:

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This is the second time in the recent past that TCS has been hit with punitive damages of $140 million in a trade secrets case filed by the software company Epic Systems. Epic Systems filed its case against the company in 2014 arguing that TCS entities accessed Epic’s web portal without authorization while servicing a mutual client and then used the misappropriated information to develop a competing software platform.

“Misappropriating sophisticated business software is, apparently, TCS’ method of entering new business markets in the United States,” CSC had said referencing the court case between TCS and Epic Systems in its complaint.

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