Infosys calls out Cognizant in US court over ‘vague’ trade secret allegations

At Nasscom’s flagship event in Mumbai last week, Infosys Ltd chief executive Salil Parekh and Cognizant Technology Solutions Corp CEO S. Ravi Kumar greeted each other pleasantly. But behind this show of cordiality, their companies have been trading blows in a Dallas court.

After Cognizant alleged that Infosys stole trade secrets related to TriZetto, its healthcare software, Infosys said in the Dallas court last week that Cognizant had not clearly listed the allegedly stolen trade secrets. 

Infosys, which has denied the allegations, informed the court on 28 February that Cognizant’s mention of broad categories of trade secrets did not qualify as specific trade secrets that are alleged to have been stolen.

Infosys also asked the Dallas court to compel Cognizant to properly identify the allegedly misappropriated trade secrets. The Bengaluru-headquartered information technology services company has rejected Cognizant’s allegations on grounds that information about the US firm’s healthcare solutions were public.

“The first six-plus pages of Cognizant’s response are non-responsive background information about the Facets and QNXT software that reads like a marketing piece interspersed with legal argument,” Infosys said in its 16-page reply to the Dallas court on 28 February, which was accompanied by supplementary information amounting to 111 pages.

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Infosys’ latest reply in court came three weeks after Cognizant alleged that the Bengaluru company had been caught “red-handed” stealing trade secrets related to its healthcare software. Cognizant had also said that Infosys had refused to allow an audit of Infosys’ use of TriZetto information.

Infosys, on its part, has alleged that Kumar, while he was with the Bengaluru-headquartered company before joining Cognizant, had stalled the progress of its healthcare software. Kumar, an Infosys veteran, left Infosys in October 2022 and joined Cognizant as CEO in January 2023.

‘Cognizant’s U-turn’

Beyond the legal battle in the US, Infosys and Cognizant are in a race to secure the second spot in India’s IT services market, behind Tata Consultancy Services Ltd. Infosys briefly pipped Cognizant in revenue during the July-September quarter. But Cognizant regained its lead over Infosys after acquiring US digital engineering firm Belcan in August.

Currently, the gap between the two companies is $143 million. Infosys reported $4.94 billion in revenue for the three months ended December, whereas Cognizant ended the period with $5.08 billion in quarterly revenue.

Cognizant, although headquartered in New Jersey, is considered an Indian-heritage IT services firm as it counts three-fourths of its 336,800 employees in India.

The Teaneck, New Jersey-based company had acquired TriZetto in 2014 for $2.7 billion, making it Congizant’s largest acquisition. As a result of that acquisition, Cognizant got ownership of QNXT and Facets, software that provide administrative solutions for healthcare companies.

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In its latest court reply, Infosys said Cognizant had taken a U-turn in how it wanted to file the legal documents.

“The deficiency of Cognizant’s response is highlighted by its position that that the document may be filed publicly. While Cognizant initially stamped the amended response “HIGHLY CONFIDENTIAL” and insisted it be treated as “Outside Counsel eyes only,” App’x 385–97, Cognizant withdrew its designation and authorized Infosys to file it publicly after the parties met and conferred,” Infosys said in its 28 February reply to the Dallas court.

The Bengaluru-based company added that Cognizant had not recognised even a single test case related to the allegedly stolen trade secrets. Infosys said such identification was critical so the court could determine whether Infosys’ test cases matched with the ones Cognizant alleges were misappropriated.

A fishing expedition

Infosys reiterated that Cognizant must be asked to serve a proper response to its questions before it is allowed to go through the Bengaluru company’s confidential files.

The homegrown IT outsourcer said identifying the allegedly stolen trade secrets right at the beginning would prevent Cognizant from making a case based on its findings in Infosys’ confidential documents. Infosys also alleged that Cognizant was taking the litigation route to access Infosys trade secrets.

“This is exactly the risk courts have warned about: a plaintiff using litigation to obtain “access the trade secret information [of a competitor] that it would otherwise be illegal for the plaintiff” to obtain,” Infosys said in its latest court filing.

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Infosys’ counsels added that they had asked Cognizant’s lawyers to extend the deadline for responses to the questions but there was no response from Cognizant’s side.

Cognizant is represented by Gibson Dunn & Crutcher Llp, a Los Angeles-based law firm, while Infosys is represented by Jenner & Block Llp, a Chicago-based law firm.

The two counsels did not immediately reply to emails sent on Tuesday.

Cognizant, which follows a January-December accounting year, reported $19.7 billion in revenue for 2024. Infosys, which follows an April-March financial year, reported a revenue of $18.6 billion for 2023-24.

Both companies are competitors in the healthcare services space. While Infosys gets about 7.5%, or $1.4 billion, of its full-year revenue from clients in the life sciences sector, Cognizant gets almost a third, or about $5.9 billion, from clients in this space.