The Epic Systems Corp. (“Epic”) and Tata Consultancy Services Ltd. (“Tata”) trade secret case concerning damages, and most recently reported by us on September 17, 2020, may continue before the U.S. Supreme Court. Although the case was included in the Supreme Court’s conference schedule on September 27 and October 8, 2021, following those conferences, the Supreme Court has asked the U.S. government to weigh in on whether the Court should grant Epic’s April petition for certiorari.
As readers of this blog may remember, the case originated in Wisconsin in 2015, where Epic asserted that Tata had unlawfully accessed Epic’s UserWeb to download more than one thousand unique files containing confidential information in order to develop a competing product. Epic alleged that 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 this misappropriation through a whistleblower at Tata. As we previously reported, following a nine-day trial, the jury announced a $940 million verdict – $240 million in compensatory damages and another $700 million in punitive damages. The U.S. District Court for the Western District of Wisconsin subsequently issued a world-wide permanent injunction against Tata, as reported here.
The District Court later struck the compensatory award for “other uses” and reduced the punitive damages award from $700 million to 480 million. And then we covered the Seventh Circuit’s decision, that instructed the lower court to cap punitive damages at $140 million – the amount of compensatory damages – thereby limiting the total award to $280 million. This is the decision that Epic has appealed to the Supreme Court arguing that the Seventh Circuit had erroneously set a cap at a one-to-one ration of punitive to compensatory damages. Epic also argued that the Seventh Circuit’s ruling contravenes a type of award that has been “permitted for hundreds of years,” and as a result, “cannot be squared with history.”
While the Supreme Court asked the Solicitor General to share the government’s views on the appeal, the Supreme Court has not provided the government with a deadline to weigh in. However, we will continue to monitor this case as a decision by the Court would set important precedent regarding punitive damages in trade secrets cases.