$1,000,000,000 Battle Bedevils IBM: Lessons from Start-Up Software Licensing Lawsuit over Code, IP, and Contracts

June 8, 2011

$1,000,000,000 Battle Bedevils IBM: Lessons from Start-Up Software Licensing Lawsuit over Code, IP, and Contracts

A big-bucks lawsuit between IBM and NEON Enterprise Software that ended only days ago offers actionable lessons for strategy, product design, product development, launches, marketing, licensing, compliance, and exit events.

By Hank Jones, Law Office of Henry W. Jones, III

How can software executives, investors, salespeople, and customers test and improve their assumptions and decisions?

An additional competitive resource is the artifacts created by other companies in their litigations. The include product development details, pricing, sales contracts, and “confidential” e-mails. Lawsuit pleadings are a unique corporate and career resource. They deliver robust case studies of “train-wreck” software business situations. Studying lawsuits can save serious screw-ups in several segments of your business.

Over $1,000,000,000 depended on a recent lawsuit in Austin, Texas between NEON Enterprise Software and IBM. What are its facts and lessons?

NEON built and in mid-2009 began pitching “zPrime” software. It enabled IBM z series mainframe users to offload processing workloads to cheaper processors – contrary to IBM’s business model and customer contracts. Both software and hardware IBM sales were threatened. IBM questioned both (a) NEON’s selling as inducing customer violations of IBM software licenses and (b) zPrime’s intellectual property (IP) propriety.

NEON sued Big Blue, asserting antitrust and other claims. And it sought a ruling that IBM’s in-field licenses failed to preclude prospects from picking up NEON’s new program.

Building a Better Board to Help Grow Your Company

CEOs are advised to build better boards, but doing so is difficult. Paul O’Dea, CEO of Select Strategies, has served on multiple boards of early-stage companies (from best to worst) over the past 20 years. Read his and fellow board members’ insights on building a better board in this post to the Sandhill.com blog, Best Practices: Operations.

Is Your Current Software Pricing Approach a Barrier to Adopting New Pricing Models?

Cris Wendt of Flexera Software discusses approaches to determining software pricing in this post to the Sandhill.com blog, Software Monetization Best Practices.

The Future That Has Already Happened

Kamesh Pemmaraju of Sand Hill discusses cloud growth indicators in this post to SandHill.com blog, Leaders in the Cloud.

Industry Analyst Jeff Kaplan Discusses the “Cloud Rush”

Darren Cunningham of Informatica shares his recent interview of Jeff Kaplan regarding cloud computing adoption and the importance of integration to cloud success in this post to the SandHill.com blog, The Cloud in Action.

Don’t Compete

Guy Smith of Silicon Strategies Marketing conpares old fashioned street fights to marketing moves in this post to the Sandhill.com blog, Best Practices: Software Marketing.

Poll: Liability in Contractual Ambiguities

Which of the following has your company done in the last nine months?
Take our Pulse Poll >>

The Latest Software Business News on SandHill.com

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VC Activity: Act-On Software lands $10 million in venture capital, says Portland startups are finally getting respect.

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Executive Moves: New executives announced at CloudBees, Saba, Splunk and other software companies.

Quote of the Week

“I screwed up.”

- Eric Schmidt, former Google CEO, referring to the fact that he didn’t focus more on mounting a challenge to Facebook when he was CEO

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