In 2016, we saw a case being filed on TCS in USA (Tata America International Corp) when EPIC Systems filed a suit to recover uS$940 million. The US Supreme Court upheld the claim of Epic to the extent of $140million. Finally, in 2023, TCS did make a provision for liability of around $125 million (Refer : 1. Even when my client is negligent, the liability can be on me : 2: Press Release from TCS )
In the TCS case it was alleged that an employee of TCS had downloaded some information from EPIC servers and it was used by TCS eventually for developing a commercial product resulting in a copyright violation.
Now another software giant of India is facing a case in US, this time for a dispute raised by another Indian company itself. This is the case filed against Infosys by Cognizant TriZetto in a US Federal Court.
(P.S: This is a developing information and information referred to here is based on other published reports. It may be corrected as required if new information comes in).
Cognizant offerings include TriZetto’s Facets and QNXT, which healthcare insurance firms use to automate tasks. Now it is the version of Cognizant that Infosys misused Trizetto’s software to create “Test Cases for Facets” and re-packaged its data into an Infosys product.
 |  |
| Rajesh Varrier | Rajesh Nambiar |
It is unfortunate that two Indian Software Companies are fighting in US Courts while the dispute relates to activities which occurred perhaps in the Indian geography.
In such cases we expect NaSSCOM to intervene and mediate a solution. But the fact that the Case has been filed soon after a former Infosys executive Mr Rajesh Varrier as the global head of operations and India Chairman and Managing Director and the movement of Mr Rajesh Nambiar from Cognizant to NASSCOM as its president is to be noted. Under the current circumstances it appears that NASSCOM is not in a position to intervene.
Both Mr Rajesh Varrier and Rajesh Nambiar can be presumed to be aware of the dispute before their movement and are part of the decision for the case being filed.
We hope wiser counsels prevail and the two organizations come to a mediated settlement and withdraw the case. MeitY should intervene and try to settle the case without the litigation in the US Courts.
Essence of the Dispute
The allegation of Trizetto is that Infosys unlawfully extracted data from its databases and used it to build and market competing software. The Complaint filed by Cognizant Trizetto Software Group INC seeks damages and injuctive relief for misappropriation of trade secrets, breach of contract and unfair competition.
The two companies were under a Non Disclosure Agreement where Infosys had access to proprietary information of Cognizant and the dispute now is that this contractual terms have been violated. More than the Trade Secret issue, the dispute is one of violation of Contractual agreement.
The respondent is named in India and it is understood that the major development center of Trizetto is also in India. Hence the jurisdiction for settlement could have been India. The petition tries to establish that jurisdiction exists in US but does not mention the jurisdiction clause in the NDA. We need to check the NDA to understand if the jurisdiction clause was mentioned there as India or US. However it is clear that Cognizant did not want to fight the case in India and chose the US forum specifically.
It appears that Infosys in this case is an authorized user of Facet and had a contract with some clients of Trizetto for testing. These were known to Trizetto also. Trizetto has its own published Test Cases which Trizetto claims as its “Trade Secrets”.
I am also reminded of the Radiant Software issue (also refer here)several years back where the training company was accused by Oracle of misusing a user license for training. At that time, we had pointed out that whenever an instance of oracle was used by Radiant Software, it was to train people on Oracle software and the skill was meant to be used only with clients of oracle who had a licensed usable software. Hence use of Oracle installations by Radiant in its training center on multiple computers were actually promoting the use of Oracle by licensed buyers. That case was filed in Madras High Court but was not contested since it was withdrawn.
In the Trizetto case, Infosys has been involved in testing Trizetto software for Trizetto customers and was assisting both the customers and the Trizetto itself to resolve any implementation issues. Trizetto claims that in the process, Infosys developed a repository of its own test cases which was a violation of the agreement and misuse of the trade secret.
Trizetto claims that the repository created by Infosys includes some of the test cases created by Trizetto and are presented deceptively as Infosys test cases.
It is noted that the test cases are directly related to Trizetto software and any benefit that Infosys could gain is related to testing Trizetto software already sold by Trizetto to its customers for which Infosys has also created its own Test Cases. These Infosys developed test cases are used for the benefit of Trizetto Customers and hence Infosys is benefitting the customers of Trizetto though this is a commercial service for which Infosys has been charging its own fees.
It is not clear if Trizetto is feeling that its own commercial opportunity to charge for “Testing” has been eroded because Infosys is a competitor for the “Testing” business.
It is alleged that another software QNXT adapter was developed by Infosys which has used confidential and proprietary information of Trizetto to develop a competing product called Helix.
Presently the complaint will be evaluated by a Jury team and thereafter the outcome would be determined.
Considering that Infosys and Cognizant has relationship of over a decade and the manpower expertise of Infosys has also contributed to the growth of Cognizant, it is necessary that the business leaders of both companies sit together without their legal counsels and arrive at a business settlement. MeitY should urge both companies to settle the dispute under a mediation in India rather than going to US courts. I hope MeitY tries to appoint Mr Rajeev Chandrashekar to mediate in this issue.
Naavi
P.S: The dispute is a developing information and if there are any errors in the information provided from the public sources, kindly let me know so that it can be corrected.
