Microsoft has filed suit against Franklin, Tennessee-based health chain Community Health Systems Inc., claiming CHS allowed its recently sold hospital facilities to unlawfully continue using Microsoft's software.
The lawsuit (PDF) alleges CHS committed "willful copyright infringement" by letting hospitals it sold off to continue using Microsoft products hosted on CHS servers. According to the suit, the health system and tech giant have licensing agreements in place for the software that say CHS cannot "distribute, sublicense, rent, lease, lend or host" Microsoft's software.
This comes at a tough financial time for CHS. The health system has been divesting a number of its hospitals to reduce its debt load. CHS began the sales in 2016 amid a financial downturn, planning to sell 17 of its hospitals to pay off debts. It decided to sell more hospitals in 2017 following further losses.
CHS posted a $2 billion loss in the fourth quarter of 2017, leading it to plan additional hospital sales. In all, it sold off 30 of its hospitals last year.
According to the suit, Microsoft contacted CHS in 2016 to begin the process of verifying licenses and compliance with contracts, according to the lawsuit. Since then, the health system has only provided a "small fraction" of the data needed to complete this review.
"CHS has been largely not responsive to, if not obstructionist of, Microsoft’s contractual right to an independent verification," according to the lawsuit. "CHS has been given every opportunity to comply with the independent verification process, and Microsoft has exhausted its best efforts to resolve this matter without judicial intervention."
Typically, customers comply with audit requests within four to six weeks, according to Microsoft, while CHS missed multiple "mutually agreed upon deadlines" and provided incomplete information.
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CHS did not respond to a request for comment.
Microsoft is asking a judge to bar CHS from engaging in further copyright infringement, along with pushing the health system to comply with its review. The tech company has also requested monetary damages for the infringement, with an amount to be determined at trial.