Compuware Settles IBM Lawsuit

The agreement brings an end to a federal trial and calls for the two vendors to share technical information to ensure software interoperability.

Compuware Corp. and IBM on Monday announced a settlement to their intellectual property and anti-trust litigation that calls for IBM to license $140 million in Compuware software and buy $260 million worth of Compuware professional services over the next four years.

The agreement, which brings to an end a federal trial that began in early February, also calls for the two vendors to share technical information to ensure interoperability of IBM and Compuware S/390 software.

Both vendors entered a patent cross-licensing agreement over patents related to both businesses.

Compuware CEO Peter Karmanos Jr. in a Monday afternoon conference call said, "This is a victory for both Compuware and IBM as well as our shareholders and customers. IBM and Compuware will form a joint task force to ensure IBM gets full value from Compuware solutions. We are committed to ensuring IBM gets every pennys worth of value. Were also committed to maintaining and growing this relationship in the future."

Compuware, based in Detroit, originally brought a lawsuit against IBM in early 2002, accusing IBM of illegally copying code from its profitable mainframe-based File-AID and Abend-AID programs.

/zimages/4/28571.gifClick here to read more about Compuwares lawsuit claiming that IBM used its monopoly power to unlawfully compete.

Compuware also accused IBM of illicit activities: specifically, blocking access to information Compuware needed to develop its products for IBM mainframes and using its monopoly power in mainframe data centers to block out competitors after it entered the same mainframe tools arena.

The agreement reached between the two vendors has no impact on IBMs ability to continue to sell the programs it allegedly copied, nor on its software bundling practices, Karmanos said.

But IBM has committed to licensing $140 million worth of Compuware software for its own internal use, and to buy $260 million worth of Compuware services for use "wherever they ask us," said Karmanos.

"Im sure some of it will be to [IBM Global Services] accounts," he added.

For Compuware, the settlement and joint task force they set up as a part of it is hoped to provide additional opportunities for the Detroit company to expand its business with IBM.

"We are going to talk hopefully to head of the ISV group. They may want to resell certain of our distributed products. We want to be able to demonstrate to them that we can be a very valuable supplier and they get measurable value even from our services business," said Karmanos.

Compuware customers will benefit from the settlement in that "it improves our access to critical technology information that will allow us to better support our customers," said Karmanos.

"Part of our collaboration will be to continue as a member of [IBMs partner program] Partnerworld, and we will receive technology information generally made available to all other independent software vendors. Our goal is to reach the Premier level of Partnerworld, which they said we could reach in the next six months," he added.

The cost of the three-year legal battle added up to about $95 million for Compuware, Karmanos estimated.

"In short, it is a great win for everybody but the lawyers," he quipped.