Infosys and Cognizant Clash Over Competition
In a significant legal battle, Infosys has filed a counterclaim against Cognizant in a U.S. court. The Indian IT giant accuses Cognizant and its CEO, Ravi Kumar, of engaging in anticompetitive practices aimed at suppressing competition in the healthcare payer software market. Infosys is seeking a jury trial and demands triple damages for the alleged harm caused, along with legal fees and expenses. This counterclaim comes six months after Cognizant initiated its own lawsuit against Infosys, claiming that the latter misappropriated proprietary information from its health tech subsidiary, TriZetto, which Cognizant acquired for $2.7 billion in 2014.
Background of the Dispute
The conflict between Infosys and Cognizant dates back to 2019 when Infosys sought to challenge Cognizant’s stronghold in the healthcare payer software sector. To do this, Infosys developed a new software platform called Infosys Helix, designed to meet the rising demand for cloud-based solutions. However, Infosys alleges that Cognizant took deliberate steps to undermine its efforts. According to Infosys, Cognizant created barriers to entry and actively recruited key executives involved in the Helix project, thereby stifling its development. These executives were allegedly encouraged to obstruct the progress of Infosys Helix during their final months at the company.
The lawsuit claims that Kumar, who was previously the president of Infosys and a key supporter of the Helix initiative, began to withdraw his support in 2022. This withdrawal reportedly delayed the project by at least 18 months. Following his resignation from Infosys in October 2022, Kumar was appointed as the new CEO of Cognizant. Infosys argues that this sequence of events is indicative of a broader anticompetitive strategy employed by Cognizant to maintain its dominance in the market.
Allegations of Anticompetitive Practices
Infosys’s counterclaim outlines several specific anticompetitive practices allegedly employed by Cognizant. One of the primary accusations is that Cognizant implemented restrictive clauses in its payer agreements. These clauses, such as “most favored vendor” and “first right of refusal,” effectively prevented Cognizant’s clients from engaging with competitors like Infosys for IT services. Such practices not only limited Infosys’s market access but also hampered its ability to compete effectively.
Moreover, Infosys claims that Cognizant restricted product training for its clients, which diminished the capacity of competitors to deliver services. The lawsuit also highlights bans on developing supplementary products that could integrate with Cognizant’s software. These unilateral non-solicitation terms were designed to protect Cognizant’s workforce while simultaneously weakening its rivals’ competitive edge. Infosys argues that these actions are clear violations of fair competition principles and have caused significant harm to its business.
Responses from Cognizant
In response to the allegations, Cognizant has firmly denied any wrongdoing. The company stated that it is committed to maintaining high standards of integrity in its business operations. Cognizant emphasized that it encourages competition but insists that competitors should not misuse its intellectual property to gain an unfair advantage. The company claims that its software products are recognized in the marketplace for their quality and customer preference.
Cognizant’s defense suggests that the legal battle is not just about competition but also about protecting its intellectual property. The company has expressed its intention to take decisive action against any allegations that could compromise its competitive standing. As the case unfolds, both companies are likely to face intense scrutiny from the legal system and the public, making this a pivotal moment in the ongoing rivalry between these two tech giants.
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