AT&T ‘independently decided” to replace BMC software, the appeals court found. Credit: Connie Zhou for IBM IBM has successfully overturned a $1.6 billion ruling that it improperly replaced mainframe software from rival BMC at AT&T. A US Appeal Court this week overruled a lower court’s judgement in deciding that “BMC lost out to IBM fair and square.” AT&T “independently decided” to displace BMC software from its mainframe environment, the three-judge appeal court panel ruled. “AT&T’s decisions and conduct — not IBM’s — are most consequentially tied to BMC’s lost profits from AT&T,” a ruling from the U.S. Court of Appeals for the 5th Circuit concluded. IBM and BMC both develop software that runs on IBM mainframes. Under a 2008 agreement, IBM provides outsourcing services to BMC and its customers, including AT&T. The Master Licensing Agreement (MLA) and an Outsourcing Attachment that governed the business relationship between IBM and BMC were amended in 2013 and 2015. In 2015, AT&T began a plan to migrate from BMC software to IBM software in its mainframe environment. AT&T wanted to replace BMC’s products in order to reduce costs. 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.” CIO.com approached BMC for comment on the ruling, asking whether it planned to launch any further appeal. A spokesperson told us that the enterprise software firm had “no comment at this time. Related content feature IT leaders’ AI talent needs hinge on reskilling Most organizations see the need to revamp their training programs to address AI skills shortages — an approach that delivers intangibles hiring can’t provide. By Grant Gross May 31, 2024 7 mins Hiring Generative AI IT Skills feature Skills the Irish Government CIO uses to advance digital transformation In his eight-year tenure as CIO at Ireland’s Department of Public Expenditure and Reform, Barry Lowry always had a vision of what digital government could look like. Here, he details how an approach built on transparency and innovation is conti By Ian Campbell May 31, 2024 8 mins CIO Government IT Cloud Management brandpost Sponsored by Cisco 3 reasons you should adopt cloud monitoring Cloud network management offers increased security, operational efficiencies, and more. By D Matthew Landry May 30, 2024 4 mins Machine Learning opinion Faultless with serverless: Cloud best practices for optimized returns What does a well-defined serverless approach look like? Let's learn some of the best modern approaches to handling Enterprises and SMEs growing serverless computing needs. By Yash Mehta May 30, 2024 5 mins Serverless Computing PODCASTS VIDEOS RESOURCES EVENTS SUBSCRIBE TO OUR NEWSLETTER From our editors straight to your inbox Get started by entering your email address below. Please enter a valid email address Subscribe