The suit, filed in the Northern District of Texas, comes months after Cognizant’s subsidiary Cognizant TriZetto alleged that Infosys had stolen trade secrets related to its healthcare insurance software. Infosys rebutted this then, stating it would vigorously defend the lawsuit in court.
In its prayer, Infosys has asked for a jury trial, for the court to ‘declare invalid and unenforceable Cognizant’s Non-Disclosure and Access Agreements (NDAAs) with Infosys and also award three times its damages suffered, as well as reasonable attorneys’ fees and costs.
Moneycontrol has viewed a copy of the counterclaim filed and has reached out to both companies for comments.
The lawsuit brings to the fore a bitter rift between two IT majors, at a time when the industry is facing uncertainty wrought by an uncertain US economy and the impact of artificial intelligence.
There is also personal history here, as Cognizant CEO Ravi Kumar is an Infosys veteran and has served as its President and Deputy COO before leaving. Moneycontrol had earlier reported that Infosys had also issued a letter to Cognizant, asking to desist from poaching its executives.
In its counterclaim, Infosys has alleged that Cognizant engaged in various endeavours that stifle competition from more innovative and efficient rivals, like Infosys, thereby depriving customers of unfettered competition that would provide lower prices and better products and services in the United States healthcare system.
Also read: Here is how other Nifty IT stocks like Infosys, HCLTech are reacting to TCS Q3 results
Further, the suit alleges that Cognizant’s monopolistic strategies include imposing restrictive contractual obligations with no legitimate purpose and barring Infosys from participating in training programs it was traditionally offered while continuing to make training available to others.
It further alleged that Cognizant has taken steps to obstruct and delay Infosys’s ability to develop a competing software product by erecting barriers to entry and luring away all the product’s executive sponsors and incentivizing them to stifle product development in the months leading up to their departures.
“Because of Cognizant’s anticompetitive scheme, healthcare payors covering 65% of the United States’s insured population continue to use Cognizant’s outdated software and pay more for that software and related IT services than they would absent Cognizant’s conduct in a competitive market,” the suit alleges.
Lens on Ravi Kumar
The Infosys suit also has significant portions on its former executive Ravi Kumar, who now leads Cognizant.
Infosys started developing its healthcare insurance offering Helix in 2019. It alleges that while Ravi Kumar initially supported the platform, he suddenly retracted internal support when he started communicating with Cognizant about joining them in 2022. This included not giving resources for the platform and delaying its launch.
“Kumar’s optimism and excitement for the Infosys Helix product suddenly changed in Spring 2022. He began to pull back support of Infosys Helix, declining requests for needed resources, which delayed the completion of Infosys Helix by at least 18 months. In October 2022, Kumar resigned from Infosys, and shortly thereafter, was announced as CTS’s new Chief Executive Officer”, the suit reads.
Further that Cognizant’s anticompetitive scheme to stall Infosys Helix’s launch included the targeted recruitment of key senior executives responsible for Infosys Helix, including Kumar, Shveta Arora and Ravi Kiran Kuchibhotla, and incentivizing them to delay and obstruct the development and marketing of Infosys Helix in the months leading up to their departures.
“After Kumar joined Cognizant, he also used his inside knowledge of Infosys Helix’s functionality, strategy, and target clients from his time acting as its executive sponsor to prevent key accounts from exploring Infosys Helix,” the suit says.
Healthcare and Life Sciences is an important business vertical for Cognizant and Infosys.
What the Cognizant suit said
Cognizant Trizetto, which sued Infosys in August last year, claimed that the allegedly stolen software applies TriZetto’s proprietary medical claims processing to a proprietary database structure, which reduces the administrative expenses associated with claims processing. Also, that TriZetto’s products and services provide solutions to the highly complex medical claims and payments processing problem in healthcare and improve healthcare operations.
Cognizant, in the document, said it made certain Infosys employees sign Non-Disclosures and Access Agreements (NDAA), that “narrowly and strictly” defined the details of Infosys’s authorised access to TriZetto’s proprietary information and trade secrets for specified reasons. “Yet, in contravention of those agreements, Infosys has misappropriated TriZetto’s trade secrets and stolen its confidential information to develop or enhance its own competing software and service offerings for its own financial gain, thus causing severe and irreparable harm to TriZetto,” the document read.
The competing software being spoken here is called Helix, a platform-powered and artificial intelligence-first suite offered by Infosys.
Old rivalry
The rivalry between Cognizant and Infosys is well known. Infosys had sent a letter to Cognizant late last year lodging its protest against the poaching of its key executives. Ravi Kumar S, an Infosys veteran, who took charge as Cognizant’s Chief Executive Officer, in January 2023, hired over 20 executive vice presidents and four senior vice presidents, many of whom were from Wipro and Infosys, Moneycontrol had then reported.
