Even as the wider equity markets traded in the green, Tata Consultancy Services slipped 2% ahead of its fourth quarter earnings announcement, weighed down by a US grand jury slapping a fine of $940 million (over Rs 6,000 crore) on the country’s largest software services exporter for allegedly stealing data from a US-based company, Epic Systems.
“While we believe it is extremely difficult to prove IP violations in software products due to at least 80% architecture remaining the same -- and this may be favourable to TCS -- in the near-term, the company may face issues in getting new business on the subcontracting side, which can have a bearing on its interim outlook,” Sandip Agarwal of Edelweiss Securities said, commenting on the development.
Electronics medical records vendor Epic Systems had filed a lawsuit accusing TCS and its arm, Tata America International Corp, of stealing trade secrets, confidential information, documents and data belonging to the company.
According to the lawsuit, TCS’ employees fraudulently accessed its software, which was then used to develop a rival product.
In its defence TCS has said there was intellectual property infringement in the case, and the company will appeal in higher courts.
“The company did not misuse or derive any benefit from any of the said information for development of its own hospital management system ‘Med Mantra’ which was implemented for a large hospital chain in India in 2009,” it said.
It said the jury’s verdict on liability and damages was unexpected, adding the company believes they are unsupported by the evidence presented during the trial.
TCS shares were trading down about 1.9% at Rs 2,475.45 in late morning trade.