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Punitive Damages

By: Derek Hawkins//October 12, 2020//

Punitive Damages

By: Derek Hawkins//October 12, 2020//

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7th Circuit Court of Appeals

Case Name: Epic Systems Corp., v. Tata Consultancy Services Ltd., et al.

Case No.: 19-1528; 19-1613

Officials: FLAUM, MANION, and KANNE, Circuit Judges.

Focus: Punitive Damages

Without permission from Epic Systems, Tata Consultancy Services (“TCS”) downloaded, from 2012 to 2014, thousands of documents containing Epic’s confidential information and trade secrets. TCS used some of this information to create a “comparative analysis”—a spreadsheet comparing TCS’s health-record software (called “Med Mantra”) to Epic’s software. TCS’s internal communications show that TCS used this spreadsheet in an attempt to enter the United States health-record-software market, steal Epic’s client, and address key gaps in TCS’s own Med Mantra software.

Epic sued TCS, alleging that TCS unlawfully accessed and used Epic’s confidential information and trade secrets. A jury ruled in Epic’s favor on all claims, including multiple Wisconsin tort claims. The jury then awarded Epic $140 million in compensatory damages, for the benefit TCS received from using the comparative-analysis spreadsheet; $100 million for the benefit TCS received from using Epic’s other confidential information; and $700 million in punitive damages for TCS’s conduct.

Ruling on TCS’s motions for judgment as a matter of law, the district court upheld the $140 million compensatory award and vacated the $100 million award. It then reduced the punitive-damages award to $280 million, reflecting Wisconsin’s statutory punitive-damages cap. Both parties appealed different aspects of the district court’s rulings.

We agree with the district court that there is sufficient evidence for the jury’s $140 million verdict based on TCS’s use of the comparative analysis, but not for the $100 million verdict for uses of “other information.” We also agree with the district court that the jury could punish TCS by imposing punitive damages. But the $280 million punitive-damages award is constitutionally excessive, so we remand to the district court with instructions to reduce the punitive-damages award.

Vacated and remanded

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Derek A Hawkins is trademark corporate counsel for Harley-Davidson. Hawkins oversees the prosecution and maintenance of the Harley-Davidson’s international trademark portfolio in emerging markets.

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