Big Blue claims that LzLabs based in Zurich, Switzerland, unlawfully reverse-engineered IBM's proprietary software to produce the Software-Defined Mainframe (SDM). This technology allows organisations to run IBM mainframe applications on open-source platforms like Linux in the cloud.

SDM, debuted in June 2016 after ten years of development, was accompanied by a suite of tools and services designed to facilitate the migration of applications from IBM mainframes to contemporary computing environments without the need for recompilation.

According to Computing IBM initiated legal action in March 2022, stating: "The SDM is a thin compatibility layer for customer applications originally built for execution on IBM mainframes. The SDM implements a compatible interface intended to enable the customer applications to be interoperable with current computing environments, such as Linux, x86, ARM and the cloud, without the customer applications having to be re-written and/or recompiled."

LzLabs argues that its technology offers a cost-effective alternative for IBM users, enabling them to run their mainframe applications in the cloud on standard hardware. IBM UK is seeking legal recourse against LzLabs, its UK subsidiary responsible for testing, and certain individuals linked to LzLabs, demanding the withdrawal of SDM from the market.

LzLabs maintains that its methods of observing, studying, and testing the interaction between customer applications and mainframes were legitimate, and contends that IBM has not substantiated any claims of misconduct.

In its defence, LzLabs asserts that IBM has not pinpointed any specific instances of infringement, such as "any specific COBOL and PL/1 binary modules, data blocks and code fragments, IBM Customer Information Control System (CICS) and IBM Management System (IMS) binary modules and code fragments."

The High Court in London, is a preferred venue for international business disputes. A victory in London could disadvantage LzLabs in its European legal challenges and bolster IBM's position in potential US litigation.

Countless organisations, both public and private, rely on IBM's mainframe ecosystem to operate numerous legacy applications that are not readily transferable to other platforms. This reliance presents a dilemma: the expertise needed to maintain these systems is dwindling as specialists retire, while the costs and risks associated with migrating to new platforms are prohibitively high.