Bracewell: BMC Software Awarded Historic $1.6 Billion in Damages in Suit Against IBM

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HOUSTON – Bracewell LLPobtained a landmark victory on behalf of BMC Software, Inc. in its lawsuit against IBM for fraudulently inducing and then violating a software licensing agreement.

On May 30, 2022, following a two-week bench trial, U.S. District Judge Gray H. Miller for the Southern District of Texas found that IBM had committed fraud and breached its contract with BMC. Judge Miller awarded BMC over $1.6 billion in damages, including $717 million in actual damages, $168 million in interest and $717 million in punitive damages.

The sweeping award reflects Judge Miller’s assessment that IBM fraudulently induced BMC to sign the 2015 licensing agreement “with no intention whatsoever of performing thereunder” in order to “exercise rights [to use BMC’s proprietary software] without paying for them, secure other contractual benefits, and ultimately acquire one of BMC’s core customers.”

Because BMC and IBM are competitors in the mainframe software space, the licensing agreement granted limited rights for IBM to access and use BMC software when acting as an IT outsourcer to BMC’s software customers. Importantly, that agreement expressly prohibited IBM from displacing BMC software with IBM software at certain customers, including AT&T, one of BMC’s largest mainframe customers, unless IBM first purchased BMC licenses.

The evidence at trial showed…

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