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IBM must pay BMC for software swap

by on01 June 2022

Judge rules

Big Blue must pay $1.6 billion to BMC for swapping in its own software while servicing their mutual client.

US District Judge Gray Miller in Houston rejected IBM’s claim that it acquired the mainframe software account of one of BMC’s core customers, AT&T.

Miller awarded damages based on his earlier determination that IBM’s role in AT&T’s decision to dump BMC “smacked of intentional wrongdoing.” His ruling came after a seven-day non-jury trial in March.

The judgment is one of the largest ever to arise from a commercial dispute, Sean Gorman, a partner with Bracewell who represented BMC in the case.

While IBM has moved toward cloud and artificial intelligence services in recent years, mainframes are still an important part of its information technology portfolio.

IBM and BMC had long operated under a carefully negotiated agreement that forbade IBM to encourage mutual clients to switch to its own competing software product line.

BMC sued IBM in 2017 claiming its rival planned to breach their agreement and poach AT&T’s software business when the two companies renewed their power-sharing deal in 2015.

IBM countered that AT&T declined BMC’s products and jumped to IBM for its own reasons, which it claimed was fair game under its pact with BMC.

Judge Miller said IBM “believed -- especially in light of BMC’s reluctance to engage in litigation -- that it could ‘always settle for a small percentage of the claim’ or for ‘pennies on the dollar,’” citing trial evidence.

The judge said “IBM’s conduct vis-à-vis BMC offends the sense of justice and propriety the public expects from American business.”

IBM said it had “acted in good faith in every respect in this engagement” and vowed to appeal.

“This verdict is entirely unsupported by fact and law, and IBM intends to pursue complete reversal on appeal,” the company said in a statement. “The decision to remove BMC Software technology from its mainframes rested solely with AT&T, as was recognized by the court and confirmed in testimony from AT&T representatives admitted at trial.”


Last modified on 01 June 2022
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