IBM dodges BMC's $1.6B bullet in US as London court slaps down LzLabs

IBM scored a pair of legal wins this week: The US Supreme Court declined to reinstate a $1.6 billion judgment previously awarded to BMC Software, and the High Court in London, England, ruled in favor of Big Blue in a lawsuit against LzLabs, which was accused of misappropriating IBM's mainframe technology.

In 2017, BMC accused IBM of unfairly replacing BMC's software with its own on AT&T's mainframes. In 2022, a Texas court ordered Big Blue to pay BMC $1.6 billion for breach of contract.

The United States Court of Appeals for the Fifth Circuit overturned that ruling last year, finding that AT&T independently chose to replace BMC's software with IBM's, and that Big Blue's actions were permissible under the existing contract.

The legal battle concluded on Monday after the US Supreme Court refused [PDF] to review BMC's appeal, effectively upholding the appellate court's decision in favor of IBM. KKR, the parent company of BMC, declined to comment, and BMC has not responded to our inquiries regarding the decision.

Meanwhile, in the UK, IBM won its legal battle against software startup LzLabs, owned by John Moores, the same person who founded BMC Software.

Big Blue had accused the Zurich-based software vendor of using a UK-based subsidiary to purchase an IBM mainframe in 2023 and reverse engineer part of it to further develop a software-defined mainframe (SDM) platform, allegedly in breach of its license agreement with IBM.

As we've previously discussed, LzLabs' SDM offering, launched in 2016, claimed to enable customers to run mainframe code on standard Linux servers and cloud platforms.

After a trial last year, High Court Judge Finola O'Farrell ruled in IBM's favor on Monday after determining that Winsopia, a UK-based subsidiary of LzLabs, had in fact violated Big Blue's terms of service.

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"IBM is delighted that the court has upheld our claims against Winsopia, LzLabs GmbH, and John Moores," an IBM spokesperson told El Reg.

"The court found that these parties had conspired to breach Winsopia's licence agreement in a deliberate, systematic and intentionally hidden effort to unlawfully reverse engineer critical IBM mainframe technology. This technology represents billions of dollars of IBM investment."

We've asked LzLabs for comment regarding the decision; we'll let you know if we hear anything back.

While IBM has claimed victory in its UK lawsuit, Big Blue's case against LzLabs in the US is still ongoing. ®