IBM protects its IP

Back in the middle of June last year I talked about IBM UK’s court battle against LzLabs in an article unimaginatively called IBM versus LzLabs. Earlier this month, the case concluded with the court finding that LzLabs had unlawfully reverse-engineered IBM mainframe technology. IBM’s intellectual property (IP) rights had been violated.

High Court judge Finola O’Farrell, in a written ruling, said that Winsopia had breached the terms of its IBM software licence and that “LzLabs and Mr Moores unlawfully procured (those) breaches”.

What did IBM have to say about the decision? It wrote: “IBM is delighted that the Court has upheld our claims against Winsopia, LzLabs GmbH, and John Moores. 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.”

The court rejected claims against LzLabs British subsidiary, LzLabs Limited, as well as the company’s current and former CEOs. There will be a further hearing later this year decide on any damages to be paid to IBM.

So, what had actually happened to cause IBM to bring a case to the London Technology & Construction Court (TCC)? According to IBM, Winsopia, a UK subsidiary of LzLabs, bought an IBM mainframe computer and an accompanying licence in 2013. LzLabs then used this access to reverse engineer IBM’s mainframe software. And the reason they wanted to do that was to create a product allowing customers to migrate off IBM mainframes and onto other hardware platforms without making changes to the software they were running.

The defence case was that LzLabs had been developing its own software for nearly a decade, and there was no unlawful use of IBM’s licenced software.

What do we know about LzLabs? It was founded in 2011, and, in 2016, it launched its Software Defined Mainframe (SDM) product that allows mainframe applications written in COBOL or PL/I to run on other platforms, eg x86 servers and Linux. More recently, SDM works with containerized workloads, and LzLabs claims that one client was able to move its entire mainframe workload of business-critical applications to SDM running on Linux systems in the cloud, without having to recompile it.

And who is John Moores? Moores is probably best known for being one of the founders of BMC Software in 1980. He put the ‘M’ in BMC. He now runs a venture capital fund, JMI Equity, which invests in IT businesses. Moores also owns LzLabs, and also founded NEON Enterprise Software (in 1995).

IBM also started court proceedings against LzLabs in Texas in 2022, where they alleged patent infringement. Here, IBM is seeking damages and an injunction to stop LzLabs from marketing products containing any IBM intellectual property.

Interestingly, LzLabs is owned and run by some of the same people who were part of NEON Enterprise Software. And NEON was sued by IBM in 2009. In that case, NEON lost in May 2011 and went out of business. In that case, NEON was selling a piece of software called zPrime that IBM objected to. As you know, IBM charges users by the amount of General Purpose Processor (GPP) they use, while also making specialty processors available for things like Linux and Db2. Now, doing your processing in a specialty processor saves money because you’re not using the chargeable GPPs – and, in real life, it can save money by putting off the need for an expensive upgrade. zIntegrated Information Processor (zIIP) allows users to offload their Db2 processing. Using zPrime, allowed users to run an estimated 50% of their workloads on specialty processors – that’s not just Db2, that was IMS, CICS, TSO/ISPF, batch, whatever.

The court ruling in this case barred NEON and some of its key employees from, reverse engineering, reverse compiling and translating certain IBM software, and also from continuing to distribute zPrime. No fines were imposed.

IBM was also in court early in March with a US$1.6 billion contract dispute between BMC Software and it. However, the US Supreme Court declined to take up the case, which BMC had brought claiming IBM had unlawfully replaced its software with IBM software at AT&T.