Software Company Charges IBM With Anticompetitive Behavior

software mainframe

Neon Enterprise Software claimed that IBM was trying to prevent owners of IBM System z mainframes from using Neon's zPrime software for managing compute workloads.

The lawsuit was filed in the Austin Division of the United States District Court for the Western District of Texas. Neon argued that IBM's alleged actions violated the Lanham Act and state unfair competition laws, "and that IBM is liable for business disparagement and tortuous interference with prospective contracts," the company said in a statement.

"IBM has used a variety of unlawful means, including misrepresentation, disparagement, threats of retaliation and baseless litigation, and other types of unfair and unlawful competition, in an attempt to crush Neon and thereby protect the revenue generated from IBM's monopoly in the processing of legacy workloads," the lawsuit claims.

An IBM spokesman told the Bloomberg news service that Neon's claims "have no merit and its product offers no innovation." He said Neon's software "deliberately subverts the way IBM mainframe computers process data" and vowed that IBM would "vigorously" contest the suit to protect the billions of dollars the company has invested in mainframe technology.

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System z mainframe owners pay software licensing fees that are tied to the transactions performed by the computer's central processor, according to the Neon suit. While older application software has to use the central processors to conduct what Neon calls "legacy workloads," processing performed by some applications can be offloaded to lower-cost systems that IBM calls "specialty processors."

Neon's zPrime software is used to move workloads from System z central processors to specialty processors, saving as much as 50 percent in licensing costs in the process, according to Neon. The company debuted zPrime in June and released an update, zPrime 1.2, last month.

The U.S. Justice Department is conducting a preliminary investigation into whether IBM has abused its monopoly position in the mainframe market, according to a story in The New York Times in October. That investigation followed a complaint by the Computer and Communications Industry Association trade group that IBM stymied competition in the mainframe market.