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Microsoft Sues CHS for 'Deliberate, Intentional, Malicious' Copyright Infringements

By John Commins  
   April 05, 2018

The suit alleges that CHS stonewalled an independent IT audit, which would show that the for-profit hospital chain was giving hospitals it had sold unlicensed access to software.

The troubles continue for Community Health Systems Inc.

Microsoft Corp. filed suit against the Franklin, Tennessee-based for-profit hospital chain this week, claiming that CHS has been "willfully infringing" on Microsoft's copyrights with extensive, unlicensed use of its software.   

In the suit, Redmond, Washington-based Microsoft said it began investigating CHS' possible violations of its volume licensing agreement in 2016, when CHS began an extended string of hospital divestitures.

Since then, Microsoft said, its contractual right to an independent audit of the use of its software has been hobbled by CHS.

Under the contract, if an audit reveals 5% or more of CHS' use is unlicensed, the hospital chain has to reimburse Microsoft for the cost of the audit, and buy the licenses at 125% of the price for each product.

"CHS has been largely not responsive to, if not obstructionist of, Microsoft's contractual right to an independent verification," the Redmond, Washington-based software giant said in court documents.

Related: CHS Moves to Nix Quorum Spin-off Agreements Amid $9M Quarrel

Microsoft claims it has given CHS "every opportunity to comply with the independent verification process, and Microsoft has exhausted its best efforts to resolve this matter without judicial intervention."

"CHS' pattern of conduct, including missing numerous mutually agreed upon deadlines and providing incomplete data, demonstrates its unwillingness to comply with its contractual obligation and/or with the independent verification process," the complaint read.

In October 2016, Deloitte & Touche LLP was retained to audit CHS' usage of Microsoft software. Thus began a 16-month-long series of stonewalling tactics that included oft delayed or cancelled meetings, "ostensible technical issues," incomplete data submissions, and repeated missed deadlines, the suit alleges.

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.

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