IBM ordered to pay BMC $1.6 billion for breach of contract

A federal judge has ordered IBM to pay Houston-based computer company BMC $1.6 billion ($2.2 billion) for fraud and breach of contract after trading its own software while serving their joint client, AT&T, according to reports.

BMC sued IBM in 2017 after AT&T discontinued BMC’s software products in favor of IBM’s own software. Such an agreement was a violation of the cautious agreement he had with IBM to work with joint clients.

U.S. District Judge Gray Miller in Houston dismissed IBM’s claim that it had acquired the mainframe software account on one of BMC’s top customers, AT&T, legally, according to Bloomberg.

In its final judgment on May 30, Miller wrote that the court found “clear and compelling evidence that IBM fraudulently induces BMC to enter the 2015 OA so that it could exercise its rights without paying them, obtain other contractual benefits and ultimately acquiring one of BMC’s major customers.

Miller said IBM did it intentionally.

All three companies have a long history of working in previous years. According ZdnetCommentfrom 2008 to 2017, AT&T was one of BMC’s software customers where the former used the latter’s software on IBM’s servers.

Since 2017, IBM has earned more than US$100 million ($139 million) from AT&T.

AT&T accounted for at least US$1 billion ($1.3 billion) of IBM’s revenue.

BMC was pleased with the outcome of the decision.

IBM said Bloomberg that “the verdict is completely unsupported by facts and law” and will pursue an appeal.

“The decision to remove BMC Software technology from its mainframes was solely that of AT&T, as was acknowledged by the court and confirmed in the testimony of AT&T representatives admitted at trial,” he added.

This first appeared in the CommsWire subscription newsletter on June 2, 2022.


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