- 05 Jul 2022
- ICICIdirect Research
US court passes order reducing fine on TCS to US$140 mn
TCS - 4485 Change: 5.95 (0.13 %)News: TCS has informed the stock exchanges that the US District Court for Western District of Wisconsin passed an order reducing the jury award of punitive damages to US$140 million. The case goes back to 2014 where TCS faced allegations from one of its clients Epic Systems of stealing trade secrets. In 2016, Epic won a jury award of US$940 mn fine on TCS. A year later, the Wisconsin court judge lowered the amount of the award to US$420 million to comply with caps on punitive damages in such cases. In 2021, a US Court of Appeals held that the punitive damages award of U$280 million was constitutionally excessive and reduced damages to $140 million, which was formalised by yesterday’s order
Views: TCS believes that it has a strong case and is expected to appeal against this judgment in the US courts of appeals. The company has already taken a provision of Rs. 1218 crore (US$165 mn) towards legal claim in FY21, which covers the order amount so TCS will not need to make any additional provision in the future. We do not expect any implications of this order in the current as well future order wins of TCS
Impact: Neutral