When access to client data turns into a $940 million trade secret dispute

Trust is at the centre of every client relationship, particularly when organisations have access to confidential systems and information. A major US trade secret case involving Tata Consultancy Services shows how misuse of that access can create significant legal and financial exposure.

Epic Systems develops electronic health record software used by hospitals across the US. TCS was engaged by one of Epic’s hospital clients to help integrate its systems with Epic’s software.

However, between 2012 and 2014, TCS employees allegedly accessed Epic’s secure client support portal and downloaded more than 6,000 unauthorised documents containing confidential information about Epic’s software.

Internal TCS communications produced in court showed that the material was used to benchmark Epic’s software against Med Mantra, a competing healthcare product being developed by TCS.

A typical sequence in the case was:

• TCS had legitimate access to Epic’s support environment.
• Employees accessed and downloaded confidential documents beyond their authorisation.
• The information was used to benchmark a competing product.
• Epic discovered the unauthorised use and filed a lawsuit.
• A jury awarded $240 million in compensatory damages and $700 million in punitive damages, totalling $940 million.
• Following appeals, the final figure was reduced to roughly $140 million.
• In 2023, the US Supreme Court declined to hear TCS’s final appeal.

The case highlights that legitimate system access does not mean unrestricted use of client information. Strong access controls, monitoring, contractual safeguards, and clear restrictions on data use are critical to preventing a client relationship from becoming a major trade secret and liability dispute.

Case 2: When a $38 million professional liability claim becomes a $4.8 million insurance dispute

Professional indemnity insurance protects consultants against liability arising from their professional services. But coverage disputes can become complicated when a large underlying claim is reduced through arbitration while interest continues to accumulate.

CDM Smith India was an engineering consultancy working on the Kerala State Transport Project, a World Bank-funded road development programme. It maintained a Professional Indemnity policy with National Insurance, with the sum insured eventually increasing to approximately $9.67 million.

In 2016, KSTP alleged deficiencies in CDM Smith’s engineering work and initiated arbitration. The original claim was approximately $38.04 million, plus interest.

The arbitrator rejected most of the claim. On 20 February 2020, CDM Smith was ultimately ordered to pay approximately $2.93 million, with 9% interest from 31 March 2017.

CDM Smith then sought indemnification from National Insurance. The insurer rejected the claim, citing limitation and policy exclusions.

The dispute then followed this sequence:

• KSTP initially claimed approximately $38.04 million.
• Arbitration reduced the liability to approximately $2.93 million.
• Interest at 9% continued to accrue from 31 March 2017.
• CDM Smith sought indemnification under its Professional Indemnity policy.
• National Insurance rejected the claim on limitation and exclusion grounds.
• The Bengaluru Commercial Court found that the insurer had not established that the claim fell outside policy coverage.
• The accumulated liability reached approximately $4.86 million.
• On 7 January 2025, the court ordered National Insurance to pay approximately $4.84 million.

The case demonstrates that an insurer’s eventual exposure can differ significantly from the original professional liability claim. Even when arbitration substantially reduces the underlying damages, accumulated interest and coverage disputes can create a significant financial obligation. Clear policy wording and timely claims management are therefore critical.

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