Satyam Computer Services said on Thursday it plans to appeal in the United States against a UK appeals court verdict that went against it in a case of alleged fraud, forgery and intellectual property rights violation filed by a British firm, Upaid Systems.
News of the verdict sent Satyam’s shares tumbling 6 per cent, but the share recovered later to close at Rs. 484.75, down 3 per cent. Satyam, the country’s fourth largest software exporter, plans to appeal in a federal court in Texas state after Upaid made headway on charges of misrepresentation and false claims on a product concerning electronic payments over mobile devices developed by the Hyderabad company.
"The US case is in a very preliminary stage and has to undergo the due process of law and Satyam is confident that it has merits in this case and would contest the case," Satyam’s chief financial officer Srinivas Vadlamani said in a statement, adding that it was too premature to measure potential damages.
"Satyam is considering its legal options as regards the dismissed appeal in the London courts," he said.
Satyam admitted that "extremely large sums of money" are involved and will proceed to a US trial in Texas. Upaid spokeswoman Joanne Hunter said in a statement that this is a very serious case of misconduct that involved fraud and forgery.
The root of the dispute goes back to 1997-98, when Satyam Enterprise Solutions, a subsidiary of Satyam Computer Services, was doing product development work with Intouch Technologies, which was later renamed Upaid Systems, to help it bring its products to the market soon.
Upaid Systems wanted to patent this product and asked Satyam to provide support as specified under their contract to Upaid to obtain the patent. Some of the then Satyam employees who worked on developing this product were also named as co-inventors in the patent credits.
However, the relationship between the two companies soured and in 2002, Satyam and Upaid concluded their relationship and based on the settlement agreement signed then, any future disputes were to be tried under UK laws. The concerned employees of Satyam have also since left the company.
In 2006, Upaid filed certain infringement claims against some companies in the US and says that during the proceedings it found out that work done by the two Satyam employees involved misrepresentation and forgery in some documents concerning the patent.