Case Brief: Simonelli Innovation LLC V. Tata Consultancy Services Ltd. (TCS)
US-based Simonelli Innovation LLC sued Tata Consultancy Services Ltd (TCS) in Texas Court for violation of the Defend Trade Secrets Act, breach of contract, fraud, and misrepresentations, gaining an unfair advantage by wrongful and improper use of Simonelli’s intellectual property (IP) and trade secrets to build its own consulting practice. Simonelli, a private Consulting firm in Texas accused TCS of misusing Simonelli’s trade secrets and/or confidential information and obtaining illegal profits, and sought a jury trial, seeking compensation for loss in revenue on account of TCS misusing its consulting services.
Simonelli Innovation LLC and TAIC entered into an ‘Alliance Agreement’ on June 11, 2014, to co-develop a “prototype factory and co-innovation model” to let TCS provide prototyping services to clients, through “Rapid Iterative Experimentation Process” (RIEP). The present case has been instituted because TCS and TAIC agreed to keep trade secrets of Simonelli Innovation LLC confidential under the Alliance Agreement and to only use the same in projects under the ‘Alliance Agreement’ that would mutually benefit both entities. Simonelli alleges breach of ‘Alliance Agreement’ and misuse of trade secrets by TCS, hence, the present suit was instituted on 15 August 2018 in Western District Court of Texas, by Simonelli.
- Breach of Alliance Agreement by TCS and non-payment of due profits of Plaintiff, as agreed under the agreement.
- The Defendants continued to use the confidential information provided by Simonelli outside of the Alliance Agreement without advising or compensating Plaintiff in violation of that agreement.
- TCS signed a contract with Simonelli Innovation, LLC, used Simonelli Innovation LLC’s confidential and proprietary techniques and information to set up a business, then refused to go forward with deals that were worked on in good faith because of the terms of the contract.
- Continued to advertise the services that Simonelli’s confidential information and trade secrets were used to create the REIP and Prototype factory as recently as May 18, 2018.
Causes of Action, as alleged by the Plaintiff:
- The first cause of action– Violation of the Defend Trade Secret Act 18 U.S.C.A. § 1836
Defendant took Simonelli’s trade secret under the guise of contractual agreement, knowingly used those secrets outside the agreement to build their business, and failed to compensate the plaintiff as per the agreement.
- The second cause of action– Breach of Contract
Defendants have breached the agreement by using Simonelli’s confidential information outside of Alliance Projects to build a consulting/innovation business in breach of that agreement. Simonelli has incurred substantial damages as a result of the Defendants’ breach of the agreement, all of which were foreseeable consequences of the Defendant’s breach.
- The third cause of action – Breach of Good Faith and fair dealing
The defendant owed the duty of good faith and fair dealing implied from the TCS America agreement which also prohibited the defendant from misusing and misappropriating the Plaintiff’s trade secrets.
- The fourth cause of action – Fraud
The defendant fraudulently represented the plaintiff that they will compensate the plaintiff for the work performed by the plaintiff in building their business as an innovation consultancy. The false representation was made by the Defendant so that plaintiff would continue to work for without proper pay.
- Fifth Cause of action– Misrepresentation
Defendants represented to Plaintiff that it would be compensated for its work in building Defendants’ consultancy infrastructure.
- The sixth cause of action– Common Law Unfair Competition
Access to the Plaintiff’s confidential information and trade secrets gives an unfair advantage to the Defendants in their competition with the Plaintiff’s.
- The seventh cause of action – Unjust enrichment
TCS and TAIC have obtained illegal profits and benefits from the services of the Plaintiff and causing them severe damage/ loss in return.
- Eighth Cause of Action – Promissory Estoppel
Plaintiff relied on the promises of the Defendants who repeatedly told them that they will be compensated for their work.
- Ninth Cause of Action – Quantum Meruit
Plaintiff did substantial work that created infrastructure, that helped Defendant to build its innovation business and from which they continue to reap benefit from without paying any compensation to the Plaintiff.
- Compensation for the loss of actual and consequential damages suffered by the Plaintiff due to the defendant’s wrongdoing.
- Profit arising from the benefit of the defendant from the plaintiff’s confidential and proprietary agreement.
- Punitive damages against the defendant in an amount to be awarded to the plaintiff by the court.