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September 10, 1990


By CBR Staff Writer

A court ruling in Philadelphia seems to give IBM a free hand in making it as difficult as possible for third party leasing and maintenance companies to reconfigure its large systems for remarketing. The court ruled that copying by leasing company Allen-Myland Inc of 3090 mainframe microcode in order to reconfigure 3090s into different models violated IBM copyrights, and the company was also found to have distributed copies of the microcode with false and misleading labels intended by Allen-Myland to mislead customers into believing that the copies were created and distributed by IBM. Additionally, the court found that the company breached agreements with IBM relating to upgrades of some 308X systems, and breached an agreement for the purchase of a 3090 Model 400E split Request Price Quotation special. A portion of one of IBM’s counterclaims was not granted based on interpretation of IBM’s 1956 Anti-trust Consent Decree, on which Allen-Myland based its original anti-trust suit against IBM. In his decision, US District Judge Thomas O’Neill ruled in part that …the evidence established that AMI has engaged in extensive copying of the 3090 microcode, both to stock its library and to supply the 3090 microcode to reconfigured or split 3090 systems. The court also found in IBM’s favour on all claims asserted by Allen-Myland against IBM, including breach of contract claims relating to 3090 microcode licences and 3090 system support, as well as IBM’s alleged interference with Allen-Myland’s 3090 split and memory upgrade activities, and dismissed its remaining anti-trust claim against IBM. The court previously ruled in IBM’s favour on AMI’s principal antitrust claim in 1988. Terms of injunctions and damages still have to be set, and Allen-Myland may appeal the rulings. The 1956 consent decree forbade IBM from hindering third party maintenance companies from looking after its machines by denying them spares, but does not specifically cover reconfigurations because the kind of upgrade that turns a 3090-200 into a 400, or split that turns a 400 into two 200s, did not exist in 1956. The new court decision strengthens IBM’s hand in designing its machines in such a way as to make it harder for third party leasing companies and others to do upgrades and splits and to offer add-on memory.

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