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March 22, 2005

Compuware smells of roses after settling with IBM

Compuware and IBM may officially have announced that they have entered into a software, services and technology relationship, but it is Compuware that has walked away with a commitment from IBM to license $140m of Compuware software over four years and to purchase $260m of Compuware services over four years.

By CBR Staff Writer

Compuware agreed to settle all outstanding litigation between the companies. It first brought the privacy and antitrust case against Big Blue in March 2002, accusing IBM of stealing its trade secrets, specifically claiming IBM stole secrets to copy two of its programs, a mainframe-based file manager and a program that helps users locate the source of problems on their mainframes.

Compuware alleged that IBM then heavily discounted the products or gave them away free as part of hardware deals in order to kill off the main competitor in the mainframe management market, namely Compuware. As the trial got underway several weeks ago, Compuware lawyer Daniel Johnson told the jury: This is about IBM, one of the largest corporations in the world, going out and embarking on a plan to kill Compuware. This case is really simple. This is about the theft of technology worth millions and millions of dollars. Johnson also presented jurors with an IBM memo apparently titled Compuware Killer, which allegedly set out its plan to compete with and subsequently destroy Compuware.

The companies have settled though, entering an agreement that Compuware chairman and CEO Peter Karmanos, Jr said, Benefits the customers, shareholders and employees of both IBM and Compuware. Compuware software and services will help IBM increase productivity and reduce costs throughout its business and the businesses of its customers. Compuware is committed to continue providing value to IBM and to the customers of IBM technology.

The money changing hands is all one way. IBM will license $140m of Compuware software over four years and has offered to purchase $260m of Compuware services over four years. They will establish a joint task force to ensure that IBM obtains maximum value from Compuware solutions.

There will also be a technical collaboration, with the pair exchanging technical information for the interoperability of IBM and Compuware S/390 architecture and programs – the programs Compuware had accused IBM of copying. Compuware continues as a member of IBM’s PartnerWorld program, under which it receives technical information generally made available to other independent software vendors. As you would expect, the pair have also entered a reciprocal patent license agreement.

When the case was in court, IBM denied the charges, and its attorneys argued that it only used public information and its own skills to develop its mainframe software products. It said Compuware’s case was simply an attempt to block competition. IBM lawyer Evan Chesler said the two companies’ software is similar not because IBM stole Compuware’s trade secrets, but simply because they are both designed to work with IBM mainframes.

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