In an eye popping damages award that appears destined for review, a Wisconsin jury returned a verdict of $940 million against Tata Consultancy Services in a case trade secret misappropriation case brought by competitor Epic Systems.
Indian outsourcing behemoth Tata was sued by Epic Systems, a privately held Wisconsin-based medical software company in Wisconsin federal court. Therein Epic asserted that Tata unlawfully accessed Epic’s UserWeb to download over one thousand unique files containing confidential information to develop a competing product. According to the Complaint, Tata gained this access through a third-party that had licensed Epic’s software and had customer-level access to the UserWeb. Epic learned of the misappropriation through a whistleblower at Tata.
Due to the unlawful computer access, the case includes claims brought under the Computer Fraud and Abuse Act as well as a number of state claims including misappropriation under the Wisconsin version of the Uniform Trade Secrets Act. The Court has described this epic battle as a “highly contentious lawsuit” and summarized the behavior of the parties in the following manner: “The parties have been involved in no fewer than a dozen discovery-related hearings with the court. Blame for this cannot wholly be assigned to defendants, as plaintiff’s counsel has had its own missteps and seems increasingly interested in obtaining sanctions given the absence of any actual proof of damages.” Epic did apparently have proof of spoliation by Tata though because it obtained an adverse inference jury instruction.
After a nine day trial, the jury handed down the huge verdict. Commentators have suggested that the award, which includes $240 million in compensatory damages and another $700 million in punitive damages, is unlikely to stand. For one thing, the Wisconsin Uniform Trade Secrets Act caps punitive damages at twice the amount of compensatory damages. Further, some have suggested that Epic’s compensatory damages claim, which is based on the theory of unjust enrichment, may also suffer from serious flaws. After Epic’s proffer of damages, the Court on Thursday described its claim in the following manner: “Epic swung for the fences by asking its damages expert to assume far broader use of its confidential information than the facts now support. At this point, that swing has not even cleared the infield.”
It is clear that this story is far from over.