Indian IT services major Hexaware Technologies Ltd has taken legal action in a United States court to throw out a massive patent infringement lawsuit that seeks over $500 million in damages. The case, filed by IT firm Natsoft, alleges that Hexaware used software technology protected by nine patents.
The Core of the Legal Dispute
Hexaware, backed by global investment firm Carlyle, filed a motion to dismiss the case on December 12. The company argues that the inventions at the heart of Natsoft's complaint are not eligible for patent protection under US law. In its court filing, Hexaware stated that the patents merely cover abstract ideas, such as the basic concept of automatically generating computer code, rather than constituting genuine technological innovations.
"For more than 150 years, the Supreme Court has held that patents cannot protect laws of nature, natural phenomena, and abstract ideas because these are the basic tools of scientific and technological work," Hexaware's filing read. It further contended that "using 'computers to compute' is not a patent-eligible 'invention'."
Background and Allegations
The lawsuit originated when privately-held Natsoft filed its complaint in an Illinois district court on September 23. Natsoft claims that Hexaware utilized application modernization software whose functionality is covered by nine patents. These patents were originally developed by Updraft, an IT services company that Natsoft acquired in 2024.
Natsoft alleges that Hexaware marketed products like RapidX, Tensai/ATOP, and Amaze for both application modernization and generative AI use cases, based on these inventions. The plaintiff claims its affiliate invested $100 million in developing the software it says was misappropriated.
Financial Stakes and Broader Industry Impact
The potential $500 million damages claim poses a serious threat to Hexaware's financial health. For Hexaware, which follows a January-December fiscal year, this sum is nearly four times its net profit of ₹1,174 crore ($132 million) for the last fiscal. The company reported annual revenue of $1.43 billion, marking a 14% year-on-year increase.
In a subsequent filing on December 19, Hexaware requested the court to halt the discovery process until a decision is made on its dismissal motion, citing concerns over unnecessary costs. The company also argued that Natsoft's complaint fails to provide sufficient detail on how exactly Hexaware's products infringe the patents, and that it merely describes the standard software development life cycle (SDLC).
Industry analysts see this case as part of a larger trend. Phil Fersht, CEO of HFS Research, noted that the dispute reflects a broader tension where legacy software patents are being tested against modern AI and automation-led development practices. As automation tools become more prevalent, companies are fiercely protecting their intellectual property to defend their market position.
This lawsuit adds to Hexaware's current challenges, which include slipping two places in India's IT rankings last year and facing project delays from some of its top clients. The case also follows a pattern of high-stakes IP litigation involving Indian IT firms, such as the 2023 case where Tata Consultancy Services was ordered to pay $140 million to Epic Systems.
