IBM slapped with suit alleging unfair mainframe competition

Neon says IBM is making false claims against its zPrime software to protect its mainframe business

IBM has been disparaging products made by a smaller rival in order to protect its lucrative mainframe business, according to a lawsuit filed on Monday.

The suit was filed by Neon Enterprise Software and concerns a software tool called zPrime that the company released in July. Neon says zPrime can reduce operating costs for mainframe users by allowing them to shift more of their computing jobs onto IBM's zAAP and zIIP specialty mainframe processors.

Customers don't pay software licensing fees to use those specialty processors, or SPs, instead of IBM's standard central processors, which has caused IBM to lash out at Neon in order to protect its mainframe business, according to the lawsuit (PDF).

IBM told its mainframe customers in a letter that "the use of zPrime will cause Neon's customers to become obligated -- contrary to IBM's original promises to customers that purchased SPs -- to pay software license fees for workloads shifted to SPs," Neon said in its lawsuit. That claim is false, Neon said.

It also accused IBM of selling additional SPs to customers only if they agree not to use Neon's product, and of characterizing zPrime as an unlawful "circumvention" technology. The lawsuit seeks damages and a permanent injunction to prevent IBM from repeating those claims.

IBM is not taking the suit lying down. In a brief statement via e-mail, it said Neon's claims "have no merit, and its product offers no innovation."

"Neon's software deliberately subverts the way IBM mainframe computers process data," IBM said. "This is akin to a homeowner tampering with his electrical meter to save money. IBM has invested billions of dollars in the mainframe this decade, and we will vigorously protect our investment."

IBM is also dealing with an antitrust inquiry into its mainframe business by the U.S. Department of Justice, following a complaint filed in September by the Computer and Communications Industry Association (CCIA).

The trade group said IBM has been refusing to issue licenses for its mainframe OS to competitors, something it had been required to do by the DOJ after actions taken against the company in the 1970s. The DOJ ended a longstanding antitrust consent decree with IBM in 2001.

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James Niccolai

IDG News Service
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