UK court scrutinises legality of mainframe to cloud application migration technology

IBM and Swiss startup LzLabs faced off in a London court on Monday in a dispute over the development of technology that allows the migration of mainframe applications to the cloud.

According to Big Blue, LzLabs used a UK-based subsidiary to license and reverse engineer IBM’s mainframe software in order to help assist in developing its Software Defined Mainframe (SDM) platform. IBM is seeking an injunction blocking the sale of SDM and potential damages over the alleged breach of contract.

LzLabs denies infringing IBM’s intellectual property and counterclaims that IBM’s lawsuit is designed to stifle innovation and snuff out competition. The company denies any improper conduct, and argues that IBM is trying to lock customers into using its software.

In a statement, IBM said the case was about fair dealing and protecting its intellectual property rather than stifling competition.

“Winsopia is the latest in a series of linked entities that have for more than a decade sought to reverse engineer proprietary IBM mainframe software for their own commercial gain. They breached a contract that IBM UK entered in good faith and then delivered IBM technology for their parent company, LzLabs, to use in a product of its own,” said the statement.

“This case has nothing to do with restricting competition. 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,” it continued.

LzLabs’ defence rests on an interpretation of the EU Software Directive. The 1991 European directive, which has long been codified into UK law, allows third-party software developers to analyse products in developing alternatives providing they avoided copying the source code.

Mainframes, championed by IBM, emerged to dominate the nascent information technology market in the 1960s, and many large enterprises such as banks and telcos still rely on IBM’s mainframe technology, now known as IBM Z, to run key applications.

The cost of rewriting applications is high, so many large enterprises have elected to maintain them on their original platform. That option is becoming less viable over time as mainframe skills dwindle with grey beard engineers versed in the intricacies of running mainframes retiring and younger developers more focused on developing workloads for cloud-based computing.

Technologies such as SDM potentially free enterprises from the dependency they still have on IBM’s hardware and operating systems. Any verdict that weakened the applicability of the EU’s Software Directive in the UK could have wider ramification for the UK technology sector.

A separate case brought by IBM against LzLabs and another company, Texas Wormhole, in the US in March 2022 is currently expected to come to trial late this year or early next. It relates to allegations of infringement of patents and misuse of trade secrets. These legally distinct claims also relate to the role and conduct of Winsopia in the development of LzLabs’ Software Defined Mainframe.

The case brought in the UK is being heard in the Technology and Construction Court division of the High Court before Mrs Justice O’Farrell, and is expected to last nine weeks.