Years-long US lawsuit ends in fresh $70 million charge for TCS

Tata Consultancy Services (TCS) will book a one-time exceptional charge of $70 million after the US Supreme Court declined to review its appeal in a years-long trade secrets lawsuit, bringing the company's total financial exposure in the matter to $220 million.

The development effectively closes a major chapter in a legal battle that has stretched across multiple courts in the United States and centred on allegations that TCS improperly used confidential information to build a competing insurance software platform.

The company disclosed the latest development in a stock exchange filing on Monday, confirming that the Supreme Court had refused to review a judgment issued earlier by the United States Court of Appeals for the Fifth Circuit.

Supreme Court leaves damages award intact

The Supreme Court's decision leaves standing a $168 million damages award in favour of DXC Technology, ending TCS's final legal challenge in the case.

According to the company's filing, TCS will now account for an additional $70 million covering damages, interest and legal costs as a one-time exceptional expense in the first quarter of FY2027.

The company said it had already made a provision of $150 million in its books for the matter in accordance with applicable accounting standards.

Key financial details include:

• Existing provision: $150 million
• Additional provision to be recorded: $70 million
• Total exposure related to the case: $220 million
• Damages award upheld by US courts: $168 million

In its filing, TCS stated that the US Supreme Court had denied its petition seeking review of the Fifth Circuit's judgment.

Dispute traces back to 2019 lawsuit

The origins of the case date back to 2019, when Computer Sciences Corporation (CSC), a predecessor of DXC Technology, filed a lawsuit in federal court in Dallas.

According to court proceedings cited by Reuters, CSC alleged that TCS hired approximately 2,200 employees from insurance company Transamerica and used their access to confidential information to develop a competing life insurance administration platform.

The case proceeded through several stages of litigation before reaching a jury trial.

In 2023, a jury concluded that TCS had wilfully misappropriated trade secrets and recommended damages of $210 million.

However, US District Judge Brantley Starr subsequently reduced the award to $168 million, comprising:

• $56 million in compensatory damages
• $112 million in punitive damages

The reduced award was later upheld by the Fifth Circuit Court of Appeals in 2025.

TCS challenged damages calculation

During its appeal efforts, TCS maintained that the damages awarded were excessive.

According to Reuters, the company told the Supreme Court that DXC should not have received unjust enrichment damages without demonstrating actual losses and also challenged the scale of the punitive damages awarded.

DXC, meanwhile, argued that the lower courts' rulings did not warrant further review.

The Supreme Court's refusal to hear the case effectively ends the appeals process and leaves the existing judgment intact.

Financial impact remains manageable

While the additional charge represents a notable one-time expense, it remains relatively small compared with TCS's overall financial performance.

The company reported fourth-quarter net profit of 137.18 billion rupees ($1.45 billion).

The latest provision will be recognised as an exceptional item in the first quarter of FY2027 and is linked specifically to damages, legal costs and related obligations arising from the litigation.

Long-running dispute reaches conclusion

The Supreme Court's decision brings to a close one of the most significant legal disputes faced by TCS in recent years.

For the company, the immediate focus now shifts from litigation management to accounting for the remaining liability. While the additional charge will affect quarterly earnings, the ruling also removes a longstanding legal uncertainty that has followed the company through several rounds of court proceedings in the United States.