US computer giant IBM is taking Zurich-based startup LzLabs to court, alleging that it made “unlawful use” of parts of its software.
LzLabs’ product helps its clients migrate from IBM computer mainframe technology onto open source alternatives. The US company says that it is “inconceivable” that LzLabs — and its UK subsidiary Winsopia — could have developed that migration software without illegally reverse engineering IBM’s technology.
“This case has nothing to do with restricting competition,” IBM said in a statement. “The issue is the unlawful exploitation of technology that represents billions of dollars of investment, and IBM UK will vigorously protect itself against the actions of Winsopia and LzLabs.”
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LzLabs state that it and Winsopia’s tools were developed without unlawfully using IBM’s intellectual property in their legal pleas.
Lzlabs declined to comment when contacted by Sifted.
A benchmark case
The case could create an important legal precedent for how startups develop products that offer solutions that challenge legacy technology.
IBM’s mainframes computer systems underpin a vast ecosystem of software at some of the world’s biggest companies. 45 of the world’s top 50 banks, 4 of the top 5 airlines, 7 of the top 10 retailers and 67 of the Fortune 100 companies use the mainframe as their core platform, according to a recent IBM report.
Startups like LzLabs are building an alternative: in 2016 it launched the Software Defined Mainframe (SDM), which enables applications built for IBM mainframe systems to run smoothly on other computing systems, like Linux, without needing to be rewritten or recompiled. Since then a number of large corporations have been exploring rehosting their IBM mainframe applications on SDM — mobile network operator Swisscom has already used the system to migrate away from legacy systems.
What is being contested?
The US giant wants the court to order LzLabs to stop selling its tech and to forbid the startup and any associated companies from making further use of IBM mainframe software. It’s also seeking damages to reflect the profits it could have been wrongly deprived of since SDM came onto the market.
In the legal proceeding, it alleges that Winsopia, its British subsidiary, which had purchased a mainframe from IBM under licence, breached its terms; and that those alleged breaches were instrumental in LzLabs’ development of the SDM. It accuses the startup of so called reverse engineering and reverse compiling — analysing and understanding how the mainframe is designed and structured in order to recreate it — which is prohibited by the contract.
LzLabs and Winsopia reject the accusation: they say the contract wasn’t breached and that the SDM was built after years of observing, studying and testing how customer applications interact with IBM’s mainframe. It says it engaged teams of experienced engineers and used information that IBM itself published about its technology, and widespread industry knowledge about the mainframes. It also stresses that LzLabs could never directly access Winsopia’s purchased mainframe.
The proceedings will start today in London, and are set to last eight weeks.
