More Patent Cases In Store For IT Cos

The disagreements and resulting lawsuits are the inevitable result of tech services firms acquiring significant software platforms. In the case of Cognizant’s TriZetto platform, this conflict is made more intense as Cognizant utilizes its IP position to capture increased market share in healthcare and Infosys is attempting to counter this - PeterBendor-Samuel, Founder & CEO, Everest Group, tells Bizz Buzz

Bengaluru: Global IT industry is likely to see increasing rate of patent-related lawsuits in the future, especially in the healthcare vertical, as competition between dominant players and challengers intensify in coming quarters.

Experts are of the opinion that recent legal tussle between Infosys and Cognizant is the outcome of such increasing competition to garner larger market share.

“This kind of disagreement and resulting lawsuit are the inevitable result of tech services firms acquiring significant software platforms. This is an example of software versus tech services.

In the case of Cognizant’s TriZetto platform, this conflict is made more intense as Cognizant utilizes its IP position to capture increased market share in healthcare and Infosys is attempting to counter this. We are likely to see more of this kind of disagreement and lawsuits surrounding TriZetto as Cognizant uses its strong IP position to muscle into protected and advantageous positions,”PeterBendor-Samuel, Founder & CEO, Everest Group, aglobal IT consultancy firm, told BizzBuzz.

Recently, Infosys and Cognizant entered into a legal wrangle when the former accused Cognizant of stealing trade secrets and alleged that its present CEO, Ravi Kumar, who was a senior leader at Infosys before joining Cognizant, deliberately slowed down development of Infosys’ healthcare platform.

In a lawsuit filed in the US, Infosys alleged that Kumar, who spearheaded the development and sales of its healthcare platform Helix during his stint at Infosys, was privy to all its confidential details and had deliberately slowed down the launch of the platform.

Infosys’ lawsuit was a counter case against Cognizant’s earlier case against the former that alleged that the Bengaluru-headquartered company stole its trade secrets related to healthcare insurance software.

Notably, Cognizant’s healthcare platform- TriZetto has a dominant position in the US healthcare industry, which draws a major share of its revenue from healthcare vertical.

“When a dominant IP platform is owned by a tech services firm, then these kind of ‘trade secret’ disagreements are likely to occur. The dominant player may attempt to create structural barriers for other IT firms by aggressively enforcing its IP and trade secret position. This can create a situation where the client feels (they are) held hostage and hence, move to address this by hiring other IT firms to both manage the platform and potentially assist in moving off the platform. When this occurs, it creates the conditions where lawsuits are filed,” Bendor-Samuel said.

The IT industry has seen such lawsuits relating to trade secrets earlier. Last year, TCS was fined Rs1,600 crore by an US court on misappropriation of trade secrets in a lawsuit filed by Computer Sciences Corporation (CSC) (Now DXC Tech). TCS is currently contesting the verdict.