A chief negotiator for BMC Software testified Tuesday that BMC was “crystal clear” in talks with IBM that the Houston-based mainframe-software provider would not budge on removing AT&T, a mutual client, from an agreement that banned IBM from removing BMC products from AT&T’s systems.
Brian Jones, a global sales director with BMC, provided an inside look of the multi-year negotiations between BMC and IBM over non-displacement language in their contract. Jones testified in the second day of a bench trial in Houston federal court. The trial is expected to last two weeks
Jones also testified that IBM “never told us, despite many opportunities to do so,” that it was working on an agreement with AT&T to displace BMC’s mainframe software from AT&T’s systems during BMC and IBM’s 2015 contract negotiations.
“What they did was wrong,” Jones said of IBM during direct-examination, handled by Bracewell’s Chris Dodson.
Jones testified that BMC tried its best to meet IBM’s needs during negotiations because it was a business relationship BMC greatly valued. But at the same time, he said, BMC was not willing to budge on IBM’s steadfast request to remove AT&T from the non-displacement list.
“It was a huge account for us,” Jones said. “It was an unreal request.”
BMC alleges that IBM illegally displaced BMC’s mainframe software from AT&T’s systems while performing an outsourcing project for the telecom giant several years ago. One of BMC’s main contentions is that IBM hid from BMC that it was negotiating a displacement project with AT&T in 2015, at the same time IBM and BMC were negotiating their contract. IBM completed the project that displaced BMC’s products from AT&T’s systems, nicknamed “Project Swallowtail,” in 2016.
“They never told us, despite their many opportunities to do so,” Jones said.
In an effort to impeach Jones’s credibility on how much he tried to remain diplomatic with IBM in their negotiations, IBM lawyer Paul Yetter during cross-examination displayed an internal BMC email in which Jones instructed a colleague to be firm in negotiations with IBM.
He encouraged the colleague to relay the message, “BMC is perfectly fine with the auto five-year extension but will fuck you at renewal.”
“Your message was it had to protect and grow BMC’s renewals?” Yetter asked.
Jones said something to the effect, that those are the words on the page.
“Those are your words,” Yetter said.
The email fed IBM’s argument that all BMC was after was making as much money as possible — not what IBM’s rights were.
Hinting at BMC’s damages model that IBM argues is excessive — ranging from $717 million to $790 million — Yetter asked Jones if AT&T had already paid BMC $790 million for a “forever” licensing agreement to use BMC’s products. Since the agreement was struck “20 to 30 years ago,” Jones said, he couldn’t confirm.