IBM says startup stole secret computer technology

IBM has accused Swiss startup LzLabs of using a British shell firm to steal and copy the trade secrets of the American tech giant.

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

IBM said Winsopia has no business other than acting on LzLabs’ instructions. And that LzLabs had directed the firm to engage in improper reverse engineering of IBM software to gain IBM’s proprietary information and trade secrets.

IBM alleged that Winsopia offered an IBM mainframe—a kind of data server computer—as an actual customer to lease it along with a copy of the mainframe’s software. It also claimed that Winsopia copied the software so that LzLabs could create a competing product.

In allegations from the mid-2010s, IBM stated that the firm had infringed patents on its software and Winsopia’s license to use mainframes. This led to court proceedings being filed in London, the UK, and Texas, USA, where LzLabs operates.

On Friday, Justice Waxman of the UK dismissed LzLabs’ attempt to block the Texas case from proceeding. Justice Waxman ruled that IBM UK could not be ordered to halt legal action brought outside the UK by its US parent firm, refusing to grant LzLabs an anti-suit injunction.