India's information technology sector is confronting a new wave of legal challenges as two of its largest companies face patent infringement lawsuits in United States courts. Tata Consultancy Services and Wipro have been sued within the last 45 days, signaling growing legal complications for Indian IT firms expanding their service offerings.
Double Legal Blow for Indian IT Giants
The recent lawsuits come as a double whammy for India's $283 billion IT industry, which is already dealing with reduced demand for traditional services. Over recent years, homegrown IT services providers have increasingly developed software platforms and products to broaden their client offerings, requiring them to use technologies that sometimes overlap with those protected by patents.
Albuquerque-based Calibrate Networks LLC filed a patent infringement lawsuit against TCS on October 28 in the Marshall division of a Texas district court. The company accused India's largest IT services firm of illegally using and selling technology that privately changes the names of software applications.
According to the complaint, TCS continued using the disputed technology even after being served with legal notice. Calibrate Networks stated that TCS had direct knowledge of the infringement but persisted in making, using, testing, selling, and marketing products that allegedly violate their patent.
Wipro Faces Similar Legal Challenge
Less than a month after the TCS case, Florida-based Mobility Workx LLC filed a similar complaint against Wipro on November 18 in the Sherman Division of a Texas district court. The lawsuit accuses Wipro of infringing upon three patents related to wireless testing, cellular network access, and 5G product testing services.
The complaint specifically targets Wipro's alleged violation of technology that enables smartphones to maintain connectivity during transit. This technology allows telecom networks to seamlessly connect users to cell towers in different locations as they travel, preventing disruption of internet or phone services.
Mobility Workx claimed that Wipro knew about the patent infringement before the complaint was filed and continued to encourage its customers to use the disputed technology. Both companies have sought jury trials and damages, though neither has specified the exact amount being claimed.
Broader Pattern of Legal Challenges
These recent cases are not isolated incidents in the Indian IT sector. Just last week, a US Court of Appeals upheld a Texas district court order requiring TCS to pay $194 million for stealing DXC Technology's trade secrets while servicing Transamerica.
The legal troubles extend beyond the industry giants. In September, New Jersey-based Natsoft Corp sued mid-sized Indian IT firm Hexaware Technologies for breach of contract and patent infringement, seeking $500 million in damages - approximately one-third of Hexaware's revenue.
Hexaware has denied all allegations, with CEO Srikrishna Ramakarthikeyan stating that their platforms result from original engineering and expressing confidence in a positive outcome.
Expert Analysis on Industry Shift
According to Phil Fersht, Chief Executive of HFS Research, these patent infringement cases result from Indian IT firms moving into more sophisticated software offerings. "As firms shift from traditional services to more software-intensive delivery, the risk surface naturally expands," Fersht explained.
Fersht noted that Indian IT companies are increasingly operating in higher-value domains involving platforms, cloud services, and artificial intelligence, which increases their exposure to patented technologies in sensitive areas like networks, mobility, and automation.
The timing of these legal challenges is particularly concerning for TCS and Wipro, both of which reported revenue declines in the first half of the fiscal year. TCS is potentially facing its first-ever annual revenue decline, while Wipro is undergoing a turnaround after two consecutive years of revenue contraction.
These legal battles could impact client confidence during a critical period when companies are scaling artificial intelligence and cloud modernization programs. Any uncertainty surrounding intellectual property rights may raise questions during deal negotiations, potentially affecting future business prospects for these IT giants.
The Indian IT sector continues to navigate these complex legal waters while transforming its service delivery models, highlighting the growing pains associated with moving up the value chain in global technology services.
