NEON And IBM Settle Long Running Mainframe Lawsuit

Mainframe software provider NEON Enterprise Software has revealed that it has settled its legal dispute with IBM, and consequently it will immediately withdraw its zPrime product from the market.

In the 31 May announcement, NEON said that pursuant to the terms of a permanent injunction, NEON and its distribution partners and affiliates will no longer market, sell, license–including any renewal or extension of any existing license, install, distribute, export, import, offer to sell, offer to license, offer to install, offer to distribute, offer to export or offer to import zPrime.

Moreover, the legal dispute was settled with no payments having been made by either party to the other as part of the settlement.

Software Withdrawn

According to the NEON press release on the settlement:

“The US District Court has ruled that (1) only workloads expressly authorised by IBM may be processed on Specialty Engines (including zIIPs and zAAPs) and (2) IBM’s contracts, including the IBM Customer Agreement and the License Agreement for Machine Code, prohibit software (a) that enables workloads not expressly authorised by IBM to be processed on Specialty Engines or (b) that circumvents IBM’s technological measures in Machine Code that protect the Built-in Capacity of Specialty Engines and enables workloads not expressly authorised by IBM to be processed on Specialty Engines. Neon has agreed to a permanent injunction under which it will withdraw zPrime from the market and request that licensees and customers remove and destroy their copies of zPrime. Neon will not renew, extend or transfer any existing zPrime license or any warranty, maintenance or service period of any existing zPrime license (or any portion thereof).”

NEON filed suit against IBM in the US District Court for the Western District of Texas in December 2009, claiming IBM was using anticompetitive mainframe tactics. IBM came back and countersued NEON in January of 2010 for unfair business practices and anticompetitive behaviour of its own, namely copyright violation.

NEON then amended its complaint in February 2010 sharing more specific details of IBM’s alleged anticompetitive behaviour.

Cost Savings

In a June 2009 press release announcing zPrime, NEON said:

“NEON zPrime can save companies with System z mainframes 20 percent or more of their annual mainframe hardware and software costs under conventional use-pricing structures. Unlike any approach to date that attempts to offload processing from a System z central processor, or CP, to IBM specialty processors such as System z Integrated Information Processor (zIIP) or System z Application Assist Processors (zAAP), zPrime easily enables the shift of huge amounts of routine workloads running on CPs to these equally-fast but lower-cost specialty processors.”

Meanwhile, this settlement with IBM does not affect any other NEON products, the company said.