TCS Q3 to take $125 million hit on Epic Systems Corporation legal woes

TCS to make provision of $125 mn in its financial statement

The current situation is even poorer than the second quarter of FY15 when the attrition rate had touched 16.2 per cent

TCS, India’s largest IT services player, in a regulatory filing made the following clarification

Shivani Shinde Mumbai

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The Supreme Court of the United States has confirmed punitive damages of $140 million against Tata Consultancy Services (TCS) in the Epic Systems Corporation case. The US court rejected TCS’ appeal on Monday, against a verdict passed by the District Court of Wisconsin, upholding the order of $140 million in punitive damages, said TCS in a statement.

The impact of this decision is that the company will make a provision of $125 million in its third-quarter results.

TCS, India’s largest information technology services player, clarified in a regulatory filing: “The company intends to make the balance provision of approximately $125 million in its financial statements as an exceptional item for the third quarter and nine months ending December 31, 2023.”

Epic filed the case against TCS in 2014, alleging that the company had stolen its intellectual property. The case was filed against TCS and Tata America International Corporation.

In 2016, a US jury imposed a penalty of $940 million on TCS. In 2017, a Wisconsin court reduced the penalty amount to $420 million to comply with caps on punitive damages. After appealing to the United States Court of Appeals for the Seventh Circuit, the trial count was asked to relook at punitive damages.  Last year, in 2022, the Wisconsin court further reduced the penalty amount to $140 million.

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First Published: Nov 21 2023 | 6:26 PM IST

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