Infosys, in a motion filed earlier in January, argued that Cognizant’s definition of trade secrets was quite broad and publicly known.
“It (Cognizant) instead relies on vague and overbroad definitions of ‘Trade Secret and Confidential Information’ that identify every aspect of two-decade-old software products, QNXT and Facets, and everything related to them as the purported trade secrets of Cognizant that were allegedly misappropriated by Infosys. That is wrong, both factually and legally,” The Bengaluru-based information technology (IT) services firm said in the motion.
It added: “A cursory internet search reveals public information about these software applications, and an enormous number of healthcare, insurance, and IT services workers have access to QNXT and Facets.”
Infosys moved a Dallas court on 17 January, seeking to compel Cognizant to properly identify its trade secrets that it alleged Infosys had misappropriated.
Cognizant, in its joint reply with Infosys filed on 22 January, sought an extension until 10 March 2025 to reply to Infosys’s counterclaim.
Infosys is represented by Jenner & Block LLP, which is a Chicago-based law firm, whereas Cognizant is represented by Gibson Dunn & Crutcher LLP, a Los Angeles-based law firm.
The legal battle
The new development lengthens the legal battle between the two software services companies, which will have the management of both companies increasingly answerable to their respective stakeholders.
The row between the two IT services companies arose in August 2024 when Nasdaq-listed Cognizant alleged that Infosys stole trade secrets of its software products that are used to process insurance claims in the healthcare sector.
Infosys countered the allegation in a 9 January filing, saying that it was Cognizant chief executive Ravi Kumar S., instead, who delayed the rollout of Infosys’ own healthcare products as he was in conversation to join Cognizant.
Ravi Kumar joined Cognizant as CEO in January 2023 after quitting Infosys.
Infosys then filed a 302-page motion on 17 January to have Cognizant clearly list out its trade secrets and requested the court to delay listing out its responses until trade secrets were clearly known.
As part of the filing, Infosys’ lawyers included court filings and emails exchanged with Cognizant’s lawyers.
Cognizant had sought information from Infosys about its own software products, the technology it developed to integrate Cognizant’s QNXT and Facets software, and the identities of the people who knew about the two software.
“As explained in the complaint, in December 2023, TriZetto discovered that Infosys was purporting to offer access to products through the ‘Infosys Business Assurance Store’ that were derived from and contain TriZetto’s confidential and trade secret information, including information derived from TriZetto’s Facets® and QNXT™ offerings. Specifically, TriZetto detected that Infosys had purportedly created a repository of Test Cases for Facets® and QNXT™ products, using information that Infosys only had access to under the strict limitations of the NDAAs it had entered with TriZetto,” read Cognizant’s response to Infosys’ first set of clarifications.
In its response, Infosys, India’s second-largest IT services company, alleged that Cognizant was ambiguous in identifying its trade secrets.
“As an initial matter, Cognizant has not specified whether it contends that all Facets and QNXT test cases are trade secrets or whether some subset of Facets and QNXT test cases contain trade secrets (and, if so, which ones and why). It is equally opaque whether Cognizant contends Infosys misappropriated Cognizant-created test cases (and, if so, which ones) or alleges that Infosys misappropriated other Cognizant information (e.g., the Facets software itself) in creating test cases,” said Infosys’ lawyers in an email to their Cognizant counterparts.
In another email response to Infosys’ lawyers, as outlined in the 302-page motion, Cognizant said it would not engage with Infosys over email to meet and discuss points pertaining to the case because Infosys had mischaracterised, as part of its summary, all its meetings and that it would not engage in exchanging emails. It added that most of the company’s requests were overbearing.
Collateral damage
At least one expert said this issue will not bode well for India’s $254-billion IT industry.
“Cognizant will have to prove in a court of law that Infosys is developing its own products from TriZetto’s intellectual properties, which belong to Infosys since it bought the software products,” said a former senior Cognizant executive on the condition of anonymity. “This issue is not good for the industry because these are large companies that have integrity in place,” the executive added.
For Infosys, this was not the only pushback in store for Cognizant.
Infosys has already requested the Dallas court for a trial by jury to prohibit Cognizant from indulging in what it considers anti-competitive practices.
Cognizant acquired QNXT and Facets in 2014 by taking over TriZetto, which provides administrative solutions in the healthcare space. These products are used by health insurance companies in the US to process claims.
Both Infosys and Cognizant have been servicing clients in the healthcare sector using the two software products, and Infosys claimed that Cognizant is erecting barriers for other service providers, including itself, to integrate the two software products into their clients’ software.
As part of its 9 January counterclaim, Infosys said Cognizant’s CEO Ravi Kumar, once a president at the Bengaluru-based company, delayed the rollout of its own software product Helix as he was in talks with the Teaneck, New Jersey-based company to join as its CEO.
This is a rare episode of a company going after its former executive.
Cognizant acquired Trizetto in 2014 for $1.3 billion, making it one of the largest acquisitions of the time. Trizetto has since helped the company scale its healthcare business.
Cognizant’s earnings from clients in the healthcare segment are four times those of Infosys. While Infosys gets about 7.5% or $1.4 billion in revenue from clients in the life sciences sector, Cognizant gets 29.3%, or $5.7 billion.
Still, the gap between their revenues is not wide, as both seek to report more business than the other. For now, Cognizant is slightly bigger with $19.4 billion in revenue last year. Infosys ended the last fiscal with $18.6 billion in revenue.
Infosys follows an April-March financial year, whereas Cognizant follows a January-December accounting year.
