Cognizant Sues Infosys Over Alleged Healthcare Software Trade Secret Theft

In a significant development in the technology sector, Cognizant TriZetto Software Group Inc has initiated legal proceedings against Infosys Ltd in a Texas federal court. The lawsuit, filed on August 23, 2024, alleges that Infosys unlawfully obtained and utilized trade secrets pertaining to Cognizant's healthcare insurance software.

The legal action centers around Cognizant's assertion that Infosys improperly accessed data from its databases to develop and market competing software products. Specifically, Cognizant claims that Infosys misused TriZetto's software to create "Test Cases for Facets," which allegedly repackages TriZetto's proprietary data into an Infosys offering. Additionally, Cognizant accuses Infosys of developing software to extract confidential information from QNXT, another TriZetto product.

This legal dispute underscores the fierce competition in the healthcare IT market, which is projected to reach $821 billion by 2026. Both Cognizant and Infosys are major players in this sector, with Cognizant's TriZetto segment providing software solutions to over 350 health plans.

The financial stakes in this case are substantial, given the size of both companies. In 2023, Cognizant reported revenue of $19.3 billion, while Infosys earned $18.5 billion. Both firms are listed on the New York Stock Exchange and employ hundreds of thousands of people globally.

This is not the first time Cognizant has been involved in trade secret litigation. In 2020, the company won a significant case against Atos' Syntel, initially securing an $854 million award. However, this decision was later overturned on appeal in 2023, with the court still finding Syntel liable for damages to be determined.

The current lawsuit seeks unspecified monetary damages and an injunction to prevent Infosys from further misusing Cognizant's trade secrets. This case is part of a broader trend, as trade secret litigation in the US has increased by 30% from 2016 to 2020, with the average cost of such cases estimated at $1.5 million.

It's worth noting that both companies have faced legal challenges in the past. Infosys settled allegations of visa misuse in the US for $34 million in 2013, while Cognizant agreed to pay $25 million to settle US bribery charges in 2019.

The case, filed in the Northern District of Texas, known for its expertise in complex commercial litigation, is being closely watched by industry observers. As of the filing, Cognizant is represented by attorneys from Gibson Dunn & Crutcher, while Infosys' legal representation has not yet been disclosed.

This legal battle highlights the ongoing tensions in the competitive tech industry, particularly in the rapidly growing healthcare IT sector. The outcome of this case could have significant implications for how companies protect their intellectual property and navigate the complex landscape of software development and data management in the healthcare industry.