TCS has been fined $940 million, or Rs. 6,100 crore, by a jury in the US on the charges of stealing healthcare software from an American healthcare company. This is one of the most serious verdicts ever handed down on an Indian company abroad.
Epic Systems, a healthcare software provider, had accused TCS of stealing documents and other confidential information tied to the software it builds for healthcare companies to manage billing, insurance benefits management and referral services. It said a TCS employee reviewed Epic’s intellectual property under the pretense of doing consulting work for Kaiser Permanente, the largest managed health care company in the U.S, and in doing so downloaded Epic’s proprietary software to help build a rival system.
Kaiser Permanente had contracted Epic to handle its patient records in 2003. Epic claims that in 2005, TCS employees, who were consulting for Kaiser Permanente, had requested access to the Epic Systems’ sensitive internal web under the guise of being Kaiser Permanente employees in need of training.
In one instance, Epic said a TCS employee used his access to Epic UserWeb to download at least 6477 documents, 1687 unique files, from an IP address outside the United States. This information was allegedly used to develop TCS’s ‘Med Mantra’, which it implemented for Apollo Hospitals in India in 2009.
TCS though claims that it had not misused or derived any benefit from documents downloaded from Epic System’s user web portal. The company plans to appeal against the verdict.
“While TCS respects the legal process, the jury verdict on liability and damages was unexpected as the company believes they are unsupported by the evidence presented during trial. TCS plans to defend its position vigorously in appeals. TCS appreciates the trial judge’s announcement, that he is almost certain he will reduce the damages award,” it said. The jury verdict would not have an impact on its Q4 results due to be announced on Monday, TCS added.
In a slowing growth environment, it is expected that the judgement will have ripple effects across the Indian outsourcing industry. “In an environment where growth is increasingly hard to find for TCS and other Indian firms, this will come as a setback to TCS, and is likely to have a knock on effect on other Indian firms wanting to go after this market which could be tarred with the same brush,” Peter Bendor-Samuel, chief executive of analyst firm Everest Group, told ET.