The 5th U.S. Circuit Court of Appeals in New Orleans has overturned a judgment requiring International Business Machines Corporation (IBM) to pay rival, BMC Software, $1.6 billion, after BMC alleged that IBM breached their contractual agreement by improperly replacing BMC’s mainframe software at AT&T with its own.
The ruling overturned a 2022 decision by U.S. District Judge Gray Miller, who had ordered IBM to pay $1.6 billion in damages to BMC for breaking their agreement. Judge Miller had concluded that IBM had already secretly agreed to replace BMC’s software at AT&T when negotiating the contract in 2015.
Writing for a three-judge panel, U.S. Circuit Judge, Edith Jones, stated that the 2022 determination concerning liability was flawed. The appeals court concluded that AT&T’s decision to switch to IBM’s software was independent of any actions by IBM, and BMC had “lost out to IBM fair and square.”
BMC declined to comment on the ruling, while an IBM spokesperson expressed gratitude that the court recognised the company’s good faith actions in the engagement.
The dispute originated when Houston-based BMC, a developer and licenser of proprietary mainframe software products, accused IBM of breaching their contract by replacing BMC’s software with its own when AT&T, one of BMC’s major clients, hired IBM to manage its mainframe operations.
Under the agreement between BMC and IBM, IBM was permitted to maintain and operate mainframes running BMC software with a “non-displacement” provision, preventing IBM from switching BMC clients’ software to its own.
Source: Reuters
