Appeal court overturns $1.6bn mainframe software ‘poaching’ ruling against IBM

BMC filed a lawsuit claiming IBM had violated their master licensing agreement by convincing AT&T to switch over to Big Blue’s software.

In 2022, a US district judge ruled in BMC’s favour, ordering IBM to pay BMC $717 million in lost licensing fees, $168 million in interest, and a further $717 million in punitive damages.

The lower court made its ruling on the basis that the deal between the enterprise software firms blocked IBM from “displacing” BMC products with IBM software.

IBM appealed. This week appeal court judges decided that the lower court had erred, overturning the $1.6 billion judgement. AT&T had decided to switch to IBM’s software independently for “other valid business reasons”, a provision covered in licensing and outsourcing agreements between IBM and BMC.

The appeal court further ruled that IBM did not violate its deal with BMC in supplying AT&T with IT services that facilitated the switchover.

IBM welcomed the ruling. “We are extremely pleased the Fifth Circuit Court of Appeals found no wrongdoing by IBM and entered a complete reversal of the district court’s verdict,” it said in a statement, adding, “IBM acted in good faith in every aspect of this engagement, and we are grateful the Court agrees.”