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IBM will have to pay 1,600 million to BMC for keeping the AT&T account

A federal judge has decided that IBM will have to pay $1.6 billion to BMC in concept of damages for taking the account of a common customer, AT&T. This company, one of the major US operators, is a client of both companies, but a few years ago it left BMC’s mainframe software products and switched to IBM software after launching in 2015, internally, the Project Swallowtail, which according to Bloomberg organized AT&T specifically to migrate to IBM software.

BMC then claimed that the agreement between AT&T and IBM violated the agreement they had with IBM on how to work with clients they had in common and filed a lawsuit against them in 2017. This agreement was signed in 2008, with a contract that stipulated how the business relationship between IBM and BMC should be conducted. Later, in 2015, both signed an expanded version of the agreement that included several attachments. Among them was an outsourcing agreement that prohibited IBM from switching mutual clients to its own software.

Between 2008 and 2017, AT&T was one of BMC’s largest mainframe software customers. The operator used its software on the mainframe servers of IBM, which was also its supplier. Before that, until 2007, AT&T had used IBM’s mainframe software.

Finally, after a trial that has lasted five years and was seen for sentencing last March the judge gray miller, has ruled in favor of BMC, which will receive the aforementioned amount as contractual damages, in addition to punitive damages, with its interests. But IBM plans to appeal the verdict, as it believes it is “completely unsupported in facts and in law. The decision to remove BMC Software technology from its mainframes is solely an AT&T thing, as has been recognized in court, and confirmed by testimonies of AT&T representatives admitted at trial«.

During the trial, Judge Miller dismissed some of BMC’s claims regarding the contract they had with IBM and related to trade secrets, but accepted that BMC had violated the contract after discovering that the one signed by BMC and IBM in 2015 and stipulating how IBM should conduct itself in relation to mutual clients was clear and “there was no dispute of the material facts that IBM had displaced BMC’s products in favor of its own«.

Thus, according to Miller, “the court finds clear and convincing evidence that IBM fraudulently induced BMC to enter into the 2015 agreement in order to exercise its rights without paying for them, secure other contractual benefits, and acquire one of BMC’s largest customers. IBM did this on purpose«.

The court found that BMC had believed that its contract with IBM “would end IBM’s problematic history of noncomplianceand that the company had exploited BMC’s gullibility to its own advantage. So IBM will have to pay, although they have already announced that they will appeal the verdict.

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