Only two days before its results for the quarter ended March 2016, Tata Consultancy Services (TCS), India’s largest IT service provider, and Tata America International Corp was slapped with a fine of $940 million (Rs 6,204crore) by a federal jury in US.
The companies, after days of hearing by the federal grand jury of the American state of Wisconsin, will also have to pay USD 240 million to the Epic Systems for stealing their software and trade secrets.
Tata must also pay another USD 700 million in punitive damages.
Epic Systems Corporation?
• A private healthcare software company, founded by Judith Faulkner in Madison, Wisconsin, US in 1979, Epic Systems reported revenues of $2.02 billion in 2015. Judith Faulkner was recognised as the “most powerful woman in health care” by Forbes in 2015.
• Their software is used to schedule doctor and patients’ appointments, update insurers on bills and payments and in facilitating telemedicine in rural communities.
• The software also has cool built-in modules that cover individual diseases and health care.
What’s the fuss about?
Tata America International Corp and TCS were accused of ““brazenly stealing the trade secrets, confidential information, documents and data” belonging to Epic Systems and a lawsuit was filed in Madison District Court during October 2014 which was amended in January and December 2015.
In its lawsuit, Epic also said that the data was taken by TCS while under the pretence of doing consulting work for Kaiser Permanente, the largest managed healthcare company in the U.S, and in doing so downloaded Epic’s proprietary software to help build a rival system.
And not only that, according to Epic’s trusted informant, Epic’s data is being “fraudulently accessed” by the TCS employees for their own competent growth and an account of one of the TCS employee’s account that was used in both US and India had 6,477 documents downloaded.
The lawsuit and what does it state?
According to the lawsuit, “Rather than compete lawfully with Epic, TCS has engaged in an apparently elaborate campaign of deception to steal documents, confidential information, trade secrets, and other information and data from Epic, for the purpose of realising technical expertise developed by Epic over years of hard work and investment.”
What does TCS has to say?
TCS says that there has been no infringement of Epic System’s IP. It also says it will appeal to the higher court and defend its position vigorously. It denies any misuse or gaining benefit from the information acquired for its own hospital management system.
Impact of Epic-TCS battle on Indian IT sector:
Although TCS seems to have denied all the accusations made by the Epic systems, it’s about time that the Indian IT sector separate their software systems both legally and physically.
Except Infosys, not many companies follow this practice. Indian firms should separate their product development and take measures to keep their documents safe in case a conflict of interest arises.
Though this incident is sure to attract a lot of negative press for TCS and competitions will not leave their chance to take advantage of this, we are hoping that the truth turns out to be TCS is preaching and that no rights have been violated.
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Views presented in the article are those of the author and not of ED.