Recently, an announcement issued by Teamsun showed that due to IBM's open source IBM WebSphere Application Server Liberty Base code and service license purchased by Teamsun, resulting in losses, Teamsun took IBM to court and demanded compensation of 82.63 million yuan. , but was eventually asked by IBM to compensate about 10 million yuan.

The beginning and end of the dispute

In March 2014, Teamsun disclosed the signing of a strategic cooperation agreement with IBM, and in June 2014, it disclosed the establishment of a joint venture company, New Cloud East, with IBM to sell IBM servers exclusively. Teamsun holds 56.45% of the joint venture company. Equity.

In March 2015, Teamsun and IBM reached a cooperation and purchased the source code of IBM WebSphere Application Server Liberty Base ("WAS Liberty Base") and IBM MQ middleware software, as well as paid technical support, training and projects provided by IBM Manage services. Teamsun paid IBM US$24,800,000.00 at the time to purchase software licenses and related services.

At the beginning of the cooperation, the two sides spent a short honeymoon period.

(The cooperation announcement draft released by Teamsun )

However, in October 2017, IBM open sourced the WAS Liberty Base purchased by Teamsun, which is now known as OpenLiberty.

Before the open source, IBM verbally informed Teamsun in September 2017 that the previously purchased software would actually stop supplying in April 2018. However, Teamsun did not publicly disclose the news in accordance with the standards of listed companies at that time.

Until September 10, 2021, Teamsun issued an announcement stating that the company had filed petitions in New York federal court and state court, requesting that IBM violated trade secrets and compensate the company for losses. The dispute between the two just surfaced.

In Teamsun's complaint, IBM not only open-sourced commercial software and stopped supplying it, but also established a joint venture with Teamsun's competitors. Since 2017, Teamsun has been in business communication with IBM to seek a solution to the problem. Although IBM proposed compensation during the process, the negotiation was deadlocked due to the delay in finalizing the details of the plan. In 2021, Teamsun decided to file a lawsuit and Arbitration and disclosure of related matters.

However, things took a dramatic turn in the months after Teamsun disclosed the dispute.

In May of this year, Teamsun's latest announcement stated that Teamsun sued IBM for compensation of RMB 82,633,201.52, but IBM countersued, requiring Teamsun to compensate IBM for USD 1,432,000, equivalent to RMB 9,814,152.

According to the announcement, IBM's counterclaim request from China International Economic and Trade Arbitration Commission has been accepted, and IBM requested:

1. Ruling that Teamsun Tiancheng, in accordance with the "Software License Agreement", submitted from 2015 to before the arbitral award in this case was audited and confirmed by a third-party auditor, Teamsun and its "transferee affiliates" sold, licensed or used the All gross revenue from all middleware products that are otherwise transferred (collectively, "Sales") based on the License Integration under the Software License Agreement, and the Sales Summary for that product, for purposes of calculating the " Continuing Payments" payable to IBM license royalties ”;

2. It is ruled that Teamsun shall pay the “continuously paid license fee” under the Software License Agreement and the liquidated damages for overdue payment until the day when Teamsun pays the full amount (the specific amount shall be subject to Teamsun’s performance of the aforementioned Calculated after sales reporting obligations);

3. It is ruled that Teamsun shall pay USD 1,391,000 for "service fees" , equivalent to RMB 9,532,324, and USD 41,000 for "travel and living expenses", equivalent to RMB 281,828 under the "Service Agreement" (the above amounts shall be calculated according to the one day before the payment date). The central parity rate between USD and RMB announced by the People's Bank of China), and the agreed penalty for overdue payment until the date of full payment;

4. It is ruled that Teamsun shall bear all the rights protection expenses paid by IBM for this case , including attorney fees, notarization fees, etc. The total amount will be confirmed at the last arbitration hearing of this case according to the actual situation;

5. It is ruled that Teamsun shall bear all the arbitration costs of the counterclaim in this case .

It can be seen from IBM's arbitration request that Teamsun seems to have failed to make payments and made payments in a timely manner. At the same time, Teamsun Tiancheng also stated that the case has not yet been tried and judged, and the result has not yet been determined.

The dispute came to a brief conclusion. Behind this dispute, IBM's open source behavior and the cooperation between large software agencies, publishers and upstream are worthy of attention.

open source innocence

From Teamsun's point of view, IBM's release of the open source Open Liberty was the trigger, which directly affected Teamsun's business. However, IBM has highly recognized this open source. For example, two years after the open source, IBM's tone is still like this:

"Liberty made history in 2017 when it went live as the first commercial microservices runtime for Eclipse MicroProfile."

"The Open Liberty project is the largest single open source project IBM has ever launched."

As early as 1998, most enterprises just use the Web to publish information, IBM hopes to transform the Web into a platform that allows enterprises to transact and operate, which directly promotes the creation of the WebSphere brand. In order to provide the best experience for developers and deploy in the cloud, in 2012, WebSphere Liberty, a runtime for IBM Cloud, was released as one of the components of WebSphere V8.5, included in IBM Cloud Private, as the core of cloud-native Java applications Provided at runtime.

(Image source: http://t.cn/A6XV1LQI )

Wu Jun once commented in the book "Top of the Wave" that IBM has so far successfully completed two major transformations, from machine manufacturing to computer manufacturing, and then from computer manufacturing to service. In IBM Walt Noffsinger's article, it is mentioned that WebSphere was born: "WebSphere not only subverted the market, but also subverted IBM. Big Blue is no longer just a computer hardware-centric company, but also a leading innovative software. and service companies.”

Liberty has seen over 7 million downloads of Docker in 2019. After gathering input from customers and others in the industry, IBM decided to open source the Liberty Java EE and MicroProfile runtimes.

To meet business needs and open source self-developed software, IBM's own open source behavior is understandable. Returning to the dispute with Teamsun, although IBM informed Teamsun of the open-source behavior of its products, it "caused that Teamsun's contractual purpose of obtaining WAS Liberty Base software could not be realized". In addition, Teamsun’s complaint also mentioned a point: IBM established a joint venture company with its competitors, “In 2019, the company discovered that IBM employees who mastered the company’s customers and sales and other trade secrets joined IBM and the company’s competitors to establish a joint venture. A joint venture company, and the company's trade secrets are not used properly. Who is this competitor? According to the results of the index "IBM, joint venture company, September 2017", the results show:

On September 8, 2017, Inspur Electronic Information Industry Co., Ltd. and International Business Machines (China) (IBM China) Investment Co., Ltd. jointly announced their strategic cooperation. The two parties will jointly establish Inspur Commercial Machinery Co., Ltd. Power Technology Server. According to the articles of association of the joint venture signed by both parties, Inspur holds 51% of the shares and IBM holds 49%.

In this regard, some people in the industry believe that in today's cloud era, traditional IT manufacturers and integrators have been declining under the successful business model... In order to face the trend of de-IOE localization, basically all foreign IT manufacturers are playing In order to set up a joint venture company with a domestic head enterprise, change the vest, and become a domestic manufacturer of Xinchuang to continue to sell in the domestic market, "Huasheng Tiancheng bought IBM's code, and then can OEM into its own products, stamped with its own LOGO, with The identity of Xinchuang manufacturer". Therefore, in the face of IBM's open source behavior and changing partners, Teamsun was greatly affected.

Of course, the dispute has not yet been finalized, and the details of the case have not been disclosed yet. In the end, who will buy the order and why will it take a while.

Author: Yijun

After buying IBM's closed-source software, it became open-source, and IBM wants me to pay 10 million yuan?

The beginning and end of the dispute

open source innocence

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