Syntel Hit With $855M Trade Secrets Verdict In Software Row

A New York federal jury slapped Syntel Inc. with an $855 million verdict Tuesday after finding that the information technology company misappropriated trade secrets and infringed copyrighted software related to a popular insurance administrative platform owned by Cognizant.

The massive compensatory and punitive damages award followed almost six years of litigation over TriZetto's Facets Core Administration platform, which is used for processing insurance claims. Cognizant Technology Solutions Corp. and subsidiary TriZetto initially started out as defendants.

In the 2015 suit, Syntel Inc., which has since been acquired by Atos, accused TriZetto of breach of contract. Syntel was after more than $6 billion in damages, according to the case. But TriZetto fired back with counterclaims, hitting Syntec with its own breach of contract claim as well as trade secret misappropriation and copyright infringement.

TriZetto and Cognizant convinced the court to realign the parties so they could proceed as plaintiffs in the trial, according to the case docket.

The seven-member jury on Tuesday unanimously found that Syntel had misappropriated more than 100 of TriZetto's trade secrets and infringed TriZetto's copyrights. The verdict was returned after two-and-a-half hours of deliberation.

The jury awarded TriZetto and Cognizant $284.8 million in damages, plus $569.7 million in punitive damages, according to the verdict.

It was one of the first in-person civil jury trials held in the Southern District of New York since the beginning of the COVID-19 pandemic, according to a statement from Kirkland & Ellis LLP, which represented TriZetto and Cognizant.

The Kirkland team called the verdict "a major victory" for its clients. A Cognizant representative declined to comment Wednesday.

Atos said in a statement Wednesday that it has already challenged the validity of TriZetto's claims and will seek to overturn the verdict.

"Atos considers that the jury's verdict is not supported by the evidence presented during the trial or the applicable law," the company said. "In addition, Atos considers the amount of damages grossly out of proportion to the acts complained of."

Atos added that the maximum amount of damages legally available in the case is about $8.5 million.

The dispute goes back to January 2010, when Syntel and TriZetto allegedly started working together. The companies entered into an agreement under which Syntel provided TriZetto with software application and product development, infrastructure, consulting and customer support, as well as other services, according to the complaint.

After Cognizant acquired TriZetto in 2014, it and Syntel stopped working together, per the suit. Under their agreement, Syntel was entitled to receive about $3.4 million in transition rebates from TriZetto, Syntel said. But TriZetto refused to pay up and "unabashedly and admittedly" violated the nonsolicitation and nonhiring provision of the companies' agreement, Syntel claimed.

Syntel filed suit in January 2015. Cognizant and TriZetto initially retained Latham & Watkins LLP, according to the case docket. Kirkland took over the case about a year and a half into the litigation.

TriZetto fired back with counterclaims in February, accusing Syntel of using its confidential information to compete, according to the docket.

In September 2018, U.S. District Judge Stewart D. Aaron sanctioned Syntel for failing to comply with discovery orders.

Heading into trial, Syntel's claims included breach of contract, intentional interference with contractual relations and misappropriation of confidential information, while TriZetto alleged similar claims against Syntel.

Syntel is represented by Jaren Janghorbani, Nicholas P. Groombridge, Kripa Raman, Crystal Parker, Joshua D. Reich, Cecilia Copperman, J. Steven Baughman and Melissa Alpert of Paul Weiss Rifkind Wharton & Garrison LLP and Todd C. Norbitz, Anne B. Sekel, Robert Weisbein, Nicole M. Marschean, Patrick J. Rodriguez and Norman C. Ankers of Foley & Lardner LLP.

Cognizant and Trizetto are represented by Mike De Vries, Gianni Cutri, Adam Alper, Pat Carson, Leslie Schmidt, Ben Herbert, Adam Kaufmann and Joshua Simmons of Kirkland & Ellis LLP.

The case is Syntel Sterling Best Shores Mauritius Ltd. et al. v. The Trizetto Group Inc. et al., case number 1:15-cv-00211, in the U.S. District Court for the Southern District of New York.