By: Aaron Kim, ITMG Insider Threat Analyst
IBM has accused a startup of using a British company as a front to steal tech and engage in corporate espionage. In a claim made to the court, Swiss company LzLabs is accused of creating a shell company called Winsopia in 2013 with the sole intent of using it to steal intellectual property. “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 said in a statement.
IBM alleged that Winsopia offered an IBM mainframe – a type of computer data server – as an actual customer to lease it along with a copy of the mainframe’s software. It also claimed that Winsopia then copied the software so that LzLabs could create a competing product. In the mid-2010 allegations, IBM stated that the company had infringed patents on its software as well as Winsopia’s license to use mainframes. This led to court proceedings being filed in London and 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 popularized by IBM during the late 20th century. Business-critical software used by organizations such as banks and financial institutions is run on mainframes to this day. However, the servers are outdated by modern standards. The cost and risk of rewriting software and moving an institution onto modern computers is less than maintain the original setup.
At the time of accusations, LzLabs and Winsopia shared two of the same directors, Mark Cresswell and Thilo Rockmann and both were named as defendants in the London case. However, a judge ruled in May that they could not be held personally liable for the activities of their companies. Cresswell stepped down from both positions in June.
LzLabs and Winsopia has denied all allegations that were brought up by IBM.
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