If you run a business that develops or uses software, this case should get your full attention. In November 2025, the Fifth Circuit Court of Appeals upheld a $168 million judgment against an IT company for misusing another company’s confidential computer code.
Here’s what you need to know, and the steps you need to take, to protect your own software and avoid ending up in court for misappropriation of trade secrets.
What Happened in the Case?
Computer Sciences Corporation (CSC) accused Tata Consultancy Services (TCS) of using CSC’s confidential software tools and documents to help win a $2.6 billion contract and to build its own competing software. TCS employees got access to CSC’s internal materials while working under a contract with CSC’s client. CSC said TCS took that material and used it to upgrade its own platform, BaNCS.
The court agreed with CSC. Even though there was a contract, the court found that TCS went beyond what was permitted and used CSC’s code for its own gain. That misuse cost TCS $56 million in compensatory damages and $112 million in punitive damages. The court also ordered TCS to stop using any parts of the misappropriated software.
What Business Owners Need to Do Right Now
1. Lock Down Your Software Code as a Trade Secret
- Keep all proprietary code behind strict digital and physical security walls.
- Use nondisclosure agreements (NDAs) with anyone who touches your code: contractors, employees, consultants, clients, etc.
- Only give access to those who truly need it, and track that access.
2. Put Clear Boundaries in Contracts
- If you let other companies or freelancers work with your code, your contract must clearly state what they can and cannot do with it.
- Spell out what happens if they use it outside the agreement, and make sure they know you’ll enforce it.
3. Avoid Using Someone Else’s Code Without a Green Light
- If a vendor, client, or third party gives you code, documentation, or tools, do not assume it is yours to use however you like.
- Misusing someone else’s protected code, even by accident, could trigger a federal trade secret lawsuit under the DTSA (Defend Trade Secrets Act).
- Train your team not to “borrow” code from clients or the internet without knowing who owns it and whether they’re allowed to use it.
- Do not trust that online code is “open source” unless you receive written confirmation from the actual author.
Why This Case Matters to You
This case wasn’t just about stealing source code. It was about misusing confidential materials received during a project. If your team is working on a client system, it is your job to make sure no one copies or reuses parts of that system later.
It also shows that trade secret cases can go nuclear, with damages totaling $168 million or more. Not only are you liable for the damage you caused, but you may also be liable for the money you saved not having to build the software from scratch.
Key Takeaways for Business Owners
- Protect your own code like it’s gold, because legally, it is.
- Have written procedures and protocols for protecting all trade secrets.
- Limit who gets access to your proprietary tools and codebase and ensure they are all subject to NDAs.
- Review all contracts involving third-party access to your systems.
- Educate your developers on what qualifies as a trade secret and what they can and can’t use.
- When in doubt, ask your lawyer. It’s much cheaper to clarify things early than to defend a lawsuit later.
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