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Epic Systems Corp. v. Tata Consultancy Services Ltd.

United States District Court, W.D. Wisconsin

September 29, 2017




         To date, this court has extensively addressed plaintiff Epic Systems Corporation's claims against defendants Tata Consultancy Services Limited (“TCS”) and Tata America International Corporation (“TAIC”), including a jury trial on those claims. Over a year after plaintiff filed its complaint, however, defendants filed counterclaims for federal and state antitrust violations, tortious interference and misappropriation of trade secrets. The court severed those counterclaims and stayed all proceedings pending a decision on plaintiff's motion to dismiss. (Pl.'s Mot. (dkt. #326); 3/2/16 Op. & Order (dkt. #538) 65.) For the reasons that follow, the court will grant that motion in its entirety.


         A. The EHR Market and Epic's Role in It

         TCS alleges that Epic is the dominant supplier of Electronic Health Records (“EHR”), claiming to serve 54% of patients in the United States. Epic has over 300 customers, including large clients such as Kaiser Permanente, Mayo Clinic, and Partners Healthcare. In May 2015, most heath care providers in the United States were using Epic's system (approximately 185, 000 providers).

         The EHR market is concentrated. In March 2015, ten EHR vendors accounted for 90% of the United States hospital market. Epic was among the top three, which together have a market share of nearly 60%

         TCS also contends that there are significant barriers to entry and switching in the EHR market. Specifically, once physicians or hospitals purchase an EHR system and load patient date, a significant expense and effort is required to switch to another software provider. TCS further alleges that Epic has developed a “closed platform that discourages interoperability and encourages customers to use only Epic's systems.” (Countercl. (dkt. #295) ¶ 58.) TCS further alleges that Epic falsely claims that the lack of interoperability is endemic to the industry, rather than specific to Epic's software. (Id. at ¶¶ 64-68.)

         B. TCS's Healthcare Software

         In 2006, TCS partnered with Apollo Hospitals, India's first corporate hospital, to develop a consistent, unified information management system for all of Apollo hospitals. First marketed in 2009, this system is named Med Mantra. Recently, TCS India has been developing a spin-off of Med Mantra called TCS-HIS. TCS-HIS is a more generic derivative of Med Mantra, with Apollo-specific functionality removed, making it more appealing to a broader range of Indian healthcare entities. TCS, however, alleges that “Med Mantra and TCS-HIS are not suitable for deployment in the United States EHR Market because of the very different nature of the U.S. healthcare system.” (Id. at ¶ 86.)

         Still, TCS “has explored customizing certain modules of Med Mantra to meet the specific requirements of clients in the U.S.” (Id. at ¶ 92.) Specifically, TCS created a laboratory management software system for a U.S. client, DaVita. (Id. at ¶¶ 93-97.) “Although TCS does not actively market the DaVita product in the U.S., TCS would, of course, be willing to work with a U.S. customer to design and build a similar solution.” (Id. at ¶ 98; see also Id. at ¶ 82 (“TCS has also developed custom-built software solutions based on its clients' specifications.”).) From this, TCS alleges that “Epic and TCS are each creating products for the U.S. healthcare marketplace, and those products are potential alternatives for each other, [making] TCS and Epic are competitors.” (Id. at ¶ 100.)

         C. Epic and TCS's Relationship with Kaiser

         On or about February 3, 2003, Kaiser Permanente entered into an agreement wherein Epic licenses computer software to Kaiser. This agreement was and is an important contract for Epic, as Kaiser Permanente is the largest managed healthcare organization in the United States. In furtherance of their agreement, Epic provided Kaiser access to the its “UserWeb, ” as well as the internet portal that Epic maintains to provide training, software-related documents and data, and other materials to its customers and their consultants. The Epic-Kaiser agreement also include provisions allowing third-party access to the UserWeb under certain conditions by, for example, consultants to Kaiser.

         TCS is also a service provider to Kaiser, including software. In 2011, Kaiser sought to expand TCS's role in testing required as part of Kaiser's implementation and ongoing maintenance of the its software. TCS's role was set forth in a scope of work statement that expressly contemplated TCS testing Kaiser's EHR Epic software. The end date of that work was April 30, 2014.

         In or about May 2011, Kaiser and TCS executives traveled to Wisconsin to give a presentation to Epic on TCS's abilities. “Immediately after the May 2011 presentation by TCS, Epic's top-level executives decided to block TCS from effectively providing [testing] services to Kaiser, which Epic knew to be a very important engagement for TCS in the healthcare space.” (Id. at ...

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