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IBM Settles zPrime Lawsuit

On May 29, 2011, Cravath client IBM entered into an agreement to settle a lawsuit brought by Neon Enterprise Software in the U.S. District Court for the Western District of Texas in December 2009. The suit concerned Neon’s software product, zPrime. Neon’s claims, seeking billions of dollars in alleged damages, included false advertising, business disparagement, tortious interference with prospective contracts and monopolization. IBM counterclaimed for breach of contract, tortious interference with contract and false advertising. In February 2011, the court issued a decision denying both parties’ motions for summary judgment, but upholding IBM’s interpretation of the relevant contracts. Certain fact questions were left for the jury. The case settled on the eve of trial, resulting in IBM’s winning a permanent injunction against Neon and the dismissal of all claims and counterclaims.

The Cravath team included partners Evan R. Chesler and Richard J. Stark and associates Jisun Park, Jefferson E. Bell, Joseph E. Lasher, Vicki McCall, Nava S. Sanders, Benjamin H. Diessel, Andrew D. Hale, Derek Mize, Derek Musa, Austin Van, Felicia Einhorn, Brian M. Jenks and Pawan Nelson. Corporate partner George F. Schoen and corporate associate Johnny G. Skumpija assisted with settlement negotiations.