IBM's 10 biggest legal tussles

Earlier this week IBM was hit by an age discrimination lawsuit by four former US employees.

According to the complaint, US law dictates that when a company is undergoing mass layoffs it can ask staff to sign away their right to collectively sue, but must provide departing employees with a list of job titles and ages of everyone being let go at that time, allowing them to gauge whether or not age is playing a part in their redundancy.

The former employees allege that IBM did not provide them with this list, and so they signed away their rights without full context for the layoffs.

This follows a similar suit filed by other ex-IBM workers last September, who accused the organisation of pushing out older staff in favour of younger, less experienced workers.

These legal jousts are nothing new for the industry stalwart, which has been embroiled in court battles ranging from anti-competitive practices to alleged hazardous work environments, to massively expensive failed projects.

CRN runs down the top 10 times IBM has faced off in the courtroom against the likes of Microsoft, Amazon and Somerset County Council.

IBM vs Amazon - filed April 2013

In a case that could be the plot of a Hollywood movie, the two tech titans squared up against each other for a contract to power the CIA's private cloud. The 10-year contract was valued at $600m (£457.5m).

Amazon Web Services (AWS), IBM and an unnamed third vendor vied for the contract, with AWS coming out on top. Miffed at losing out, IBM filed a protest with the US' Government Accountability Office in an effort to win the deal for itself.

Its protest was upheld by that authority, forcing the CIA to re-open the bidding process.

However, AWS took a leaf out of its competitor's book and filed a complaint with a US court, challenging this decision. The court threw out IBM's objection and the firm ceded defeat to AWS.

Intriguingly, very little detail of what exactly the lucrative contract involved and the companies' arguments could be made public due to the secretive nature of the CIA.

Our verdict: A short and sweet attempt to re-open the bidding process, but the real intrigue here lies in what the secretive CIA's private cloud holds 8/10

IBM's 10 biggest legal tussles

IBM vs Groupon - filed March 2016

Big Blue sought $167m in damages from online discount giant Groupon, alleging it infringed on four of its patents.

These patents included two from its 1980s pre-internet Prodigy communications network, a third that was developed as part of efforts to preserve state information in internet communications, and a fourth patent relating to single-sign-on technology.

The legal battle waged for two years until a jury found Groupon guilty of willful infringement and recommended damages of $82.5m to IBM - half of what IBM was seeking. In October 2018, the two parties settled on $57m damages as well as a long-term patent cross-licence agreement.

Our verdict: What looked to be gearing up to a fantastic courtroom clash between the two ended somewhat anticlimactically 6/10

IBM's 10 biggest legal tussles

IBM vs Amazon (again) - filed October 2006

The CIA deal was not the first legal dispute between the pair. In 2002, IBM flagged its concerns about intellectual property infringement to Amazon. It then spent the next four years repeatedly nudging Amazon about a licensing deal - to no avail.

In 2006, Big Blue blew up and filed a suit in a US court. John E Kelly, then SVP of technology and intellectual property at IBM (now EVP), said at the time: "When someone takes our property, without our permission through a licence, we have no option but to protect it through every means available to us."

The patents IBM claimed were being infringed included presenting applications in an interactive service, storing data in an interactive network, presenting advertising in an interactive service and ordering items using an electronic catalogue.

Amazon finally relented in May 2007, settling with its agitator for an undisclosed figure, and agreeing to a long-term patent cross-licence.

Our verdict: A clean, clear-cut case, with a lingering admiration for Amazon's ability to ignore years of continuous complaints 7/10

IBM's 10 biggest legal tussles

Southwest One (IBM) vs Somerset County Council - filed September 2012

Southwest One was a joint outsourcing venture between Somerset County Council and IBM, the latter of which owned 75 per cent.

It was responsible for outsourcing back-office tasks, procurement and IT services. A 10-year contract was signed in 2007, with the aim of saving the local authority £180m over that timeframe.

Southwest One sought £25m, claiming that it should be paid more money according to terms established in the contract as it had identified savings the council might make in its procurement.

Somerset council retaliated with a countersuit questioning the quality and performance of the IBM-backed firm.

The court case was scheduled for November 2013, but the two parties agreed on an out of court settlement of £5.9m and renegotiated terms for the remaining four years of the contract.

However, Somerset County Council ended the contract early in 2015.

Our verdict: A showdown between a local authority and a tech behemoth would have made for interesting courtroom fodder 5/10

IBM's 10 biggest legal tussles

IBM vs Microsoft - settled July 2005

The origin of Microsoft's ubiquitous Windows operating system lies in this murky competition law case.

IBM negotiated a cool $775m settlement for what it claimed was a broken agreement by Microsoft. The payout stemmed from an earlier case taken by the US Justice Department against Microsoft in which a judge ruled that the then Bill Gates-headed company indulged in anti-competitive practices.

In 1989, the two companies agreed to develop the OS/2 operating system which was intended to replace the original operating system for the IBM PC, as well as for high-end computing systems. However, Microsoft went ahead and developed its now-famous Windows operating system as an alternative for business customers, undercutting its union with IBM.

The ruling judge at the time stated: "From 1994 to 1997 Microsoft consistently pressured IBM to reduce its support for software products that competed with Microsoft's offerings, and it used its monopoly power in the market for Intel-compatible PC operating systems to punish IBM for its refusal to co-operate."

Our verdict: The underhanded origins of Windows, the court ruling and the gargantuan payout combine to make this a standout case 10/10

IBM's 10 biggest legal tussles

The State of Queensland vs IBM - filed December 2013

The Australian state of Queensland took the vendor to court over what it claimed was a failure to replace its health department's payroll.

The project was initially expected to cost AUS$6m (£3.2m), but that figure somehow bloated to AUS$1.2bn.

IBM won the contract to build a new payroll application in 2007. It initially estimated the project at the AUS$6m figure, but later admitted that the real cost would be AUS$27m.

The project went downhill from there, with the system taking years to build but not working properly, a revolving door of people working on it, and spiralling costs.

In August 2013, the Queensland state government banned Big Blue from future contracts, until it could show better project management controls.

The state also conducted its own investigation into the saga, where it found that IBM's employees acted unethically in the bidding process, but also that government employees mismanaged the project, causing it to stretch out for years.

IBM settled with one iteration of the Queensland administration, with the state agreeing not to sue if the vendor made the computer systems work properly.

However, the succeeding administration rowed back on this agreement, challenging the tech giant in court, seeking an undisclosed figure for damages. That case was ultimately lost in 2016, with the state having to foot the legal bill for both parties.

Our verdict: A ridiculously bloated failed project, failings on both sides and a walk-back on a previous agreement, this case had it all 10/10

IBM's 10 biggest legal tussles

The US government vs IBM - filed Jan 1969

Big Blue could have given Microsoft some pointers on being the focus of anti-competition litigation, as it faced off against the US government in a 13-year-long legal battle.

IBM's dominant market share in the 1960s set off an investigation by the US Department of Justice, which then filed a complaint against it. It alleged that the company was monopolising or attempting to monopolise the business computers market.

Interestingly, one of the government's key arguments centred on what it alleged then were illegal marketing practices - but are now considered industry standard - such as prematurely announcing new products, which it claimed was to prevent customers looking elsewhere.

The longevity of the case was partly blamed on the constant flux of the government's legal team - it had at least three different legal teams at three different times during the course of the trial, and it was constantly expanding or changing the scope of the charges.

The case spanned the terms of five US presidents, before being dropped by the Department of Justice in 1982, when it concluded that the case was without merit.

Our verdict: This case is a time capsule of attitudes to technology in the mid to late 20th century 9/10

IBM's 10 biggest legal tussles

Compuware vs IBM - filed March 2002

Software vendor Compuware alleged that Big Blue used its source code in several of IBM's own tools, directed its services customers to IBM offerings and denied rival vendors the technical information required to build software for IBM systems.

IBM did not take these charges lying down; it countersued with its favourite allegation - that Compuware infringed on a number of its patents.

The case trundled along until both parties agreed on a $400m settlement in favour of Compuware.

That settlement would see IBM spend $260m on Compuware's services and $140m on licensing its software. Both sides also agreed to a patent cross-licence and shared information to ensure cross-functionality between their respective products.

Compuware's then CEO Peter Karmanos said at the time that the legal tussle cost the firm around $95m and that the settlement was a "great win for everyone but the lawyers".

Our verdict: What started with a big-bucks bang ended with a whimper that sounds like a partnership rather than a legal settlement 4/10

IBM's 10 biggest legal tussles

IBM vs employees - October 2003

The age discrimination case brought by former employees is not the first time IBM has been in the firing line for alleged workplace misconduct.

In the early 00s, two ex-employees brought a case against Big Blue, alleging that the company knowingly exposed them to working conditions that caused cancer.

The two staff members had worked at the vendor's facility in California from the 1960s to the 1990s and claimed that they suffered from chemical poisoning as a result of their work in hard disk manufacturing and circuit board assembly.

IBM denied the allegations, arguing that its workers' exposure to chemicals was within the legal limits and it had informed workers about these hazards and took steps to protect their health.

A jury agreed with Big Blue and the suit was thrown out.

Our verdict: This Erin Brockovich-like drama had the winning David vs Goliath formula but this time Goliath won 7/10

IBM's 10 biggest legal tussles

Co-op vs IBM - filed December 2017

It was all rainbows and sunshine back in June 2015 when Co-operative Insurance announced A £55m deal with the tech behemoth, which would see it building and managing an integrated service platform for the British firm.

"IBM will provide technology services for all insurance business functionality including new business processing; claims processing; policy servicing; and interfacing to third parties," stated Co-op at the time.

Just a year later, and the project was beset with serious delays, leading to the two organisations being decidedly unco-operative, with the insurance firm demanding compensation for the delays and IBM issuing an invoice for licence fees. The latter eventually terminated the contract in July 2017.

Co-op then filed a £130m lawsuit against IBM, claiming the vendor had intentionally breached the contract and that the delays meant it did not have to pay the invoice.

The tech giant hit back with a £2.89m countersuit, claiming the invoiced licence fees were separate from the scheduled work and that Co-op brought the contract termination on itself by not paying it.

The case is ongoing.

Our verdict: This will be one to watch. Will IBM take its favoured approach and settle out of court, or will it fight the dispute all the way?