Supreme Court Rejects Epic Systems’ Trade Secret Lawsuit Compensation Appeal

The U.S. Supreme Court has rejected an appeal by medical records company Epic Systems to reverse a reduction in compensation that the firm was awarded in a 2016 trade secret lawsuit against Tata Consultancy Services (TCS). Epic was originally awarded $940 million, which included $240 million in compensatory damages and $700 million in punitive damages, as TCS and its subsidiary Tata America International Corporation were found guilty of stealing trade secrets.

In the lawsuit, filed in 2014, Epic claimed that a TCS employee pretended to be a Kaiser Foundation Hospitals employee in an effort to create an account and install software on a Kaiser facility computer in Portland, Oregon, according to Fierce Healthcare. The successful installation of the software enabled TCS employees to download more than 6,000 files. These files helped TCS to better understand Epic’s competing software, Epic alleged in the lawsuit documents. A federal court in Wisconsin found TCS and its subsidiary guilty on seven claims. Some of these claims included misappropriation of trade secrets, unfair competition, unfair enrichment, and breach of contract. TCS and its subsidiary did not deny wrongdoing but did claim that it “did not misuse or derive any benefit from [the] downloaded documents,” according to a statement that TCS issued after the initial court decision.

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Federal and state courts have since ruled to decrease Epic’s awards from $940 million to $420 million in total damages. In 2017, a district court reduced the punitive damages from $700 million to $280 million and the compensatory damages from $240 million to $140 million. The reductions were in accordance with Wisconsin law, which stipulates that punitive damages cannot exceed double the amount of compensatory damages. Epic petitioned to reverse the decision to decrease its awards via a writ of certiorari, or a request for the Supreme Court to review a lower court’s ruling, which it filed in April of 2021. The request was recently declined by the Supreme Court.

The original amount of the payout in this lawsuit was one of the largest ever for a trade secrets case. However, a Seventh Circuit judge claimed that the punitive damages were “constitutionally excessive” before ruling to reduce the damages, according to Fierce Health.