IBM accuses start-up of stealing secret computer tech


IBM has accused a Swiss tech start-up of using a British front company to steal and copy its trade secrets.

LzLabs created a “shell company” called Winsopia in 2013 that existed solely for intellectual property infringement, IBM said in claims made in the High Court.

IBM said: “Winsopia has no business, except to act at the direction of LzLabs.

“And that direction is to engage in improper reverse engineering of the IBM software to gain IBM’s trade secret and proprietary information.”

IBM alleged that Winsopia posed as a genuine customer to lease an IBM mainframe – a type of computer data server – together with a copy of the mainframe’s software. It also claimed that Winsopia then copied the software so LzLabs could create a competing product.

In allegations dating back to the mid-2010s, IBM said the company infringed patents on its software as well as Winsopia’s licence to use the mainframe. This led to court proceedings being filed in London and in Texas, where LzLabs also operates.

On Friday, Mr Justice Waksman threw out LzLabs’ attempt to stop the Texas case from going ahead. The judge said IBM UK could not be ordered to halt legal action brought outside Britain by its US parent company, declining to grant anti-suit injunctions in LzLabs’ favour.

The Swiss startup’s main product is called a “software-defined mainframe”. This lets a customer run programs created for mainframes on a modern computer server instead. LzLabs says using its product saves customers the cost of leasing machines from IBM.

Mainframes were popularised by IBM during the latter half of the 20th Century. Business-critical software used by organisations such as banks and financial institutions is run on mainframes to this day. While the servers are outdated by modern standards, the cost and risk of rewriting software and moving an institution onto modern computers is less than maintaining the original setup.

At the time of the alleged intellectual property infringements LzLabs and Winsopia shared two of the same directors, Mark Cresswell and Thilo Rockmann.

While both were named as defendants in the London case, a judge ruled in May that they could not be held personally liable for the activities of their companies. Mr Creswell stepped down from his directorships of both businesses in June.

LzLabs and Winsopia deny infringing IBM’s patents on its technology. The London and Texas cases continue.