Shares of IT services firm Tata Consultancy Services (TCS) were down in early trade on Wednesday after the firm said it would take a hit from a lawsuit over intellectual property in the US.
What Happened: The company said late on Tuesday that it will set aside $125 million (₹1,041 crore) as an “exceptional item” in its upcoming third-quarter results. This provision is related to a trade secret lawsuit filed by US-based Epic Systems.
The lawsuit, initiated in 2014, accused TCS and Tata America International Corp of misappropriating intellectual properties to develop their own, despite being contracted to implement Epic’s healthcare software. The US Supreme Court recently upheld a District Court of Wisconsin verdict, which includes $140 million (₹1,166 crore) in punitive damages.
See Also: Why Tata Motors Shares Are Upbeat Today
TCS was initially found guilty in 2016, with the jury awarding damages of $940 million (₹7,832 crore). Subsequent hearings led to a reduction of the fine to $420 million (₹3,500 crore) in 2017, comprising $280 million (₹2,332 crore) in punitive damages and $140 million in compensatory damages.
After an appeal to the US Court of Appeals, 7th Circuit, Chicago, the punitive damages were deemed excessive, prompting the US District Court for the Western District of Wisconsin to reduce them to $140 million in July 2022.
Price Action: TCS’ share price tanked 0.58% to ₹3,489.85 at the start of trade on Wednesday.
Read Next: Tata Technologies IPO Opens Nov. 22: What Are Analysts Saying
Don't miss a beat on the share market. Get real-time updates on top stock movers and trading ideas on Benzinga India Telegram channel.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.