IBM wins UK lawsuit against LzLabs for mainframe intellectual property theft

When it comes to protecting its mainframe technology, IBM wields a pretty big sword. This week, its defense triumphed as IBM won a judgement against LzLabs for violating Big Blue’s intellectual property rights.

“IBM is delighted that the Court has upheld our claims against Winsopia, LzLabs GmbH and John Moores,” IBM wrote in a statement about the verdict. 

Entrepreneur Moores is the owner of Switzerland-based LzLabs and well known for founding BMC Software in 1980.

“The Court found that these parties had conspired to breach Winsopia’s license 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,” IBM wrote.

In the case, which IBM filed in England and was decided by the London Technology & Construction Court (TCC), IBM alleged that LzLabs’ UK subsidiary Winsopia acquired an IBM mainframe and then illegally reverse-engineered the Big Iron software to build LzLabs’ core Software Defined Mainframe (SDM) package. 

The TCC is a specialized court within the High Court of Justice in England and Wales and is designed to settle technically complex cases. In its decision released March 10, the court included background on the dispute, noting that the purpose of the SDM is to allow IBM mainframe customers to run their existing applications, written for a mainframe, without mainframe hardware or software: “The SDM comprises a number of programs which can run on conventional x86 hardware (used by most laptops, PCs and servers) using Linux or other open-source operating systems and open-source database products. The aim of the SDM is to migrate existing applications which have been written to run on a mainframe and enable such programs to be run on the x86 runtime environment without recompilation,” the judgement reads.

IBM licensed its mainframe software to Winsopia beginning in 2013, according to the court documents. “IBM’s primary case is that the defendants breached, or procured breach of, the ICA [IBM customer agreement], using Winsopia’s access to the IBM mainframe software to develop the SDM by unlawful reverse engineering of the licensed software,” the court wrote.

LzLabs deliberately misappropriated IBM trade secrets by reverse engineering, reverse compiling and translating IBM software, IBM claimed. IBM also alleged that LzLabs has made false and misleading claims about the capabilities of LzLabs’ products. 

In the court filing, the judge wrote that “Winsopia breached that ICA and that LzLabs and Moores unlawfully procured the above breaches of the ICA by Winsopia.”

The March 10 ruling followed a 2024 trial. Another hearing at an undetermined date will determine damages or further actions, the court stated.

IBM previously noted LzLabs is owned and run by some of the same individuals who owned and ran Neon Enterprise Software, LLC of Austin, Texas.

“Neon previously attempted to free ride on IBM’s mainframe business, and prior litigation between IBM and Neon ended with a U.S. District Court permanently barring Neon and certain of its key employees from, among other things, reverse engineering, reverse compiling and translating certain IBM software, and also from continuing to distribute certain Neon software products,” IBM wrote.

More IBM mainframe litigation

The LzLabs ruling came on the same day IBM won another legal battle with its mainframe technology. In this case, the U.S. Supreme Court declined to take up a $1.6 billion contract dispute between IBM and BMC software.

BMC had asked the justices to reconsider a U.S. appeals court’s decision last year that overturned its win against IBM, according to a Reuters report. “BMC had persuaded a lower court judge that IBM unlawfully replaced BMC’s mainframe software at AT&T, but the 5th U.S. Circuit Court of Appeals threw out the award last year, ruling that BMC had “lost out to IBM fair and square.”

AT&T had hired IBM to run its mainframe operations. BMC filed a lawsuit in Houston federal court accusing IBM of breaching their contract when AT&T abandoned its software for IBM’s, Reuters stated.