Microsoft is suing Franklin, Tenn.-based Community Health Systems for alleged copyright infringement, claiming the provider has allowed hospitals it divested to continue using Microsoft software without paying for it.
The lawsuit filed in March in the U.S. District Court for the Middle District of Tennessee also states CHS has repeatedly failed to comply with Microsoft's audit of the hospital system's computer software use.
A CHS spokeswoman declined to comment.
Microsoft allows large companies like 126-hospital CHS to license its software for use across the entire business. Under a license agreement, CHS and its affiliated companies are prohibited from distributing or lending Microsoft software to others, according to the lawsuit. The computer software giant is also allowed to perform audits to make sure customers are complying with the license agreement, the complaint stated.
Microsoft repeatedly attempted to audit CHS' use of its software in October 2016. Over the next 16 months, CHS failed to cooperate with the audit and ultimately sent over only a fraction of the data Microsoft's hired independent auditor Deloitte requested, according to the lawsuit. Microsoft said it usually takes customers about four to six weeks to collect the data required.
At one point, CHS refused to provide Deloitte with any data until the auditor signed an additional nondisclosure agreement, and then tried to limit the scope of the audit, according to the complaint. Once the nondisclosure agreement was signed, the lawsuit claims CHS released data for just one-sixth of its company.
Meanwhile, CHS was divesting some subsidiaries to pay off its debt. Microsoft claims CHS has intentionally allowed those divested hospitals to continue using copyrighted Microsoft software hosted on CHS' servers without a license.
Microsoft is asking the court to prohibit CHS from allowing its former subsidiaries to use the software, and to order CHS to comply with an audit. The company also requested damages in an amount determined at trial.
In 2017, CHS recorded operating revenue of $15.4 billion, down 17% from 2016, when its operating revenue was $18.4 billion. It reported a net loss for the year of $2.5 billion, compared with a loss of $1.7 billion the year before.
