Case 1:09-cv AWA Document 163 Filed 05/31/11 Page 1 of 3 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF TEXAS AUSTIN DIVISION
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1 Case 1:09-cv AWA Document 163 Filed 05/31/11 Page 1 of 3 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF TEXAS AUSTIN DIVISION NEON ENTERPRISE SOFTWARE, LLC, v. Plaintiff-Counterclaim Defendant, INTERNATIONAL BUSINESS MACHINES CORPORATION, Defendant-Counterclaim Plaintiff. Case No. 1:09-CV AWA UNOPPOSED MOTION FOR ENTRY OF PERMANENT INJUNCTION AGAINST NEON International Business Machines Corporation ( IBM ) respectfully moves for entry of the attached Permanent Injunction Against Neon. As reflected by the signatures of counsel on the attached order, IBM and Neon have agreed and consented to the entry of this injunction in connection with the settlement of this case. Upon entry, the parties will submit a stipulation of dismissal with prejudice of all claims. IBM and Neon agree that the attached order meets the procedural and substantive requirements of Rule 65 of the Federal Rules of Civil Procedure and Title 28 of the United States Code. 1
2 Case 1:09-cv AWA Document 163 Filed 05/31/11 Page 2 of 3 Dated: May 31, 2011 Respectfully submitted, /s/ Shannon H. Ratliff Shannon H. Ratliff State Bar No Ryan A. Botkin State Bar No Katherine P. Chiarello State Bar No RATLIFF LAW FIRM, P.L.L.C. 600 Congress Avenue, Suite 3100 Austin, TX Phone: (512) Fax: (512) sratliff@ratlifflaw.com rbotkin@ratlifflaw.com kchiarello@ratlifflaw.com R. Paul Yetter, State Bar No Collin J. Cox, State Bar No YETTER COLEMAN LLP 909 Fannin Suite 3600 Houston, Texas Phone: (713) Fax: (713) pyetter@yettercoleman.com ccox@yettercoleman.com Evan R. Chesler Richard J. Stark Teena-Ann V. Sankoorikal CRAVATH, SWAINE & MOORE LLP Worldwide Plaza 825 Eighth Avenue New York, NY Phone: (212) echesler@cravath.com rstark@cravath.com tsankoorikal@cravath.com ATTORNEYS FOR INTERNATIONAL BUSINESS MACHINES CORPORATION 2
3 Case 1:09-cv AWA Document 163 Filed 05/31/11 Page 3 of 3 CERTIFICATE OF SERVICE I hereby certify that a true and correct copy of the foregoing document, together with all attachments, was served upon all counsel of record via the Court s ECF filing system on May 31, Alan D. Albright Brian C. Nash BRACEWELL & GIULIANI LLP 111 Congress Avenue, Suite 2300 Austin, Texas Chris Reynolds Jean C. Frizzell Jeremy L. Doyle REYNOLDS, FRIZZELL, BLACK, DOYLE, ALLEN & OLDHAM LLP 1100 Louisiana, Suite 3500 Houston, Texas Counsel for Plaintiff-Counterclaim Defendant Neon Enterprise Software, LLC /s/ Ryan A. Botkin Ryan A. Botkin 3
4 Case 1:09-cv AWA Document Filed 05/31/11 Page 1 of 9 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF TEXAS AUSTIN DIVISION NEON ENTERPRISE SOFTWARE, LLC, v. Plaintiff-Counterclaim Defendant, INTERNATIONAL BUSINESS MACHINES CORPORATION, Defendant-Counterclaim Plaintiff. Case No. 1:09-CV AWA PERMANENT INJUNCTION AGAINST NEON Before the Court is IBM s Unopposed Motion for Entry of Permanent Injunction Against Neon (the Motion for Entry ) filed by Defendant Counterclaim-Plaintiff International Business Machines Corporation ( IBM ) against Plaintiff-Counterclaim Defendant NEON Enterprise Software, LLC ( Neon ) (collectively the Parties ). Having considered the Motion for Entry, the pleadings and record in the case, the applicable authorities, and all other pertinent matters, the Court enters the following order (the Permanent Injunction ): WHEREAS, Neon and IBM are parties to the above-captioned suit, styled Neon Enterprise Software, LLC v. International Business Machines Corporation, Case No. 1:09-CV AWA, in the U.S. District Court for the Western District of Texas, Austin Division (the Litigation ); WHEREAS, Neon and IBM have consented to entry of this Permanent Injunction, and have stipulated to the dismissal of the remaining claims in the Litigation subject to this Permanent Injunction; Accordingly, by the agreement and consent of the parties, it is hereby ORDERED,
5 Case 1:09-cv AWA Document Filed 05/31/11 Page 2 of 9 ADJUDGED and DECREED as follows: I. JURISDICTION AND VENUE 1. This Court has jurisdiction of this action pursuant to the provisions of 28 U.S.C and 28 U.S.C. 1332(a). The Court has personal jurisdiction over both Neon and IBM. 2. Venue is proper in this Court under 28 U.S.C. 1391(b). 3. The Court shall retain jurisdiction of this case and Enjoined Neon Persons (as defined below) after entry of this Permanent Injunction to enforce compliance with the terms and conditions of this Permanent Injunction and to take any action necessary or appropriate for its enforcement, interpretation, execution, modification, or adjudication of disputes. Any Party may apply to the Court for any relief necessary to construe or effectuate this Permanent Injunction. 4. The Parties agree, and the Court finds, that this Permanent Injunction meets the procedural and substantive requirements of Rule 65 of the Federal Rules of Civil Procedure and Title 28 of the United States Code. II. DEFINITIONS 1. Capacity on Demand shall mean an IBM System z offering for authorized use of Builtin-Capacity. 2. Built-in-Capacity shall mean any computing resource or capability that may be included with a Machine and that is to remain inactive, or for which use is restricted, until the right to access and use the resource or capability is properly acquired directly from IBM or through an authorized IBM reseller. Such computing resources and capabilities include, without limitation, processors, memory, storage, interactive processing capacity and workload-specific resources or capabilities (such as a specific operating system, programming language or application to which use of the Machine is limited). 3. Governmental Authority shall mean any federal, national, foreign, supranational, state, provincial, county, local or other government, governmental, regulatory or administrative authority, agency, instrumentality or commission or any court, tribunal, judicial or arbitral body of competent jurisdiction. 4. Machine shall mean a hardware device, its features, conversions, upgrades, elements or accessories, or any combination of them. 5. person shall mean a natural person, corporation, partnership, limited liability company, joint venture, association, trust, Governmental Authority, unincorporated organization or other entity. 6. software, product or device with functionality similar to that of zprime shall mean any software, product or device that directs, routes, transfers, enables workloads, or in any 2
6 Case 1:09-cv AWA Document Filed 05/31/11 Page 3 of 9 way facilitates workloads or circumvents IBM s technological measures to direct, route, transfer, enable, or in any way facilitate workloads, not expressly authorized by IBM in writing to run on IBM s Specialty Engines. 7. source, object and executable code of zprime shall mean the primary enablement method of zprime, alternate enablement methods A and B, any other code, known by whatever name, that enables workloads, or circumvents IBM s technological measures to enable workloads, not expressly authorized by IBM in writing to run on IBM s Specialty Engines and any listings for such code. 8. Specialty Engines shall mean IBM s System z Integrated Information Processor (ziip), System z Application Assist Processor (zaap), Integrated Facility for Linux (IFL), Internal Coupling Facility (ICF) and System Assist Processor (SAP). 9. zprime shall mean zpersist, zprime versions 1.1, 1.2, and 2.1, and any product or portions of products, known by whatever name, using any of the workload enablement methods utilized by zprime or any similar method. zprime does not include the following identified products or portions of products that Neon represents are unrelated to the zprime workload shifting enablement methods, to the extent the identified products do not use any of the workload enablement methods utilized by zprime or any similar method: Database Director, the Eclipse Utility suite, HALO, Lightning Extend, Lightning X, Mission Control, Prefix Update, Partitioned Database Facility, Eclipse ILM, Lightning DEDB, Lightning Reclaim, Record Reorganizer, Move OP, DB2 Audit for z/os, the portion of Neon Enterprise Software Server that does not use any of the workload enablement methods utilized by zprime or any similar method, or the portion of Application Director that does not contain zpersist or any other workload enablement method utilized by zprime or any similar method. 10. For the avoidance of any doubt, the term customer and licensee shall include any trialee. III. PERMANENT INJUNCTION AGAINST NEON AND OTHERS 1. Neon, its officers, agents, servants, employees, attorneys, board members and all other persons in active concert or participation with Neon, including but not limited to John Moores, Lacy Edwards, Tom Harper, David Kreiss, and Tony Lubrano (collectively with Neon, the Enjoined Neon Persons ), are enjoined as follows: a. To the extent that Neon has a contractual right to do so under the terms of the applicable license agreement with any zprime licensees (in each case, as in effect on the date of this Permanent Injunction), Neon (including its subsidiaries, affiliates, and related entities) shall take all contractual steps available to immediately, or at the earliest possible date for each license, terminate all outstanding licenses of zprime. Neon shall also promptly request, for each terminated license, certification from each licensee of zprime that the licensee has discontinued all use of zprime, has uninstalled it from all of such licensee s 3
7 Case 1:09-cv AWA Document Filed 05/31/11 Page 4 of 9 computer systems and has destroyed all of such licensee s copies of zprime, and Neon shall invoke any available contractual rights to obtain such certification. Neon shall immediately notify IBM when it secures a certification (as described above) from a licensee and shall concurrently provide such certification (including the identity of such licensee) to IBM. Notwithstanding anything to the contrary contained in this Permanent Injunction, Neon (including its subsidiaries, affiliates, and related entities) shall use its reasonable best efforts to immediately terminate all outstanding licenses of zprime and obtain any zprime code, including, without limitation, any source code in escrow, in the possession of customers or in the possession of licensees; provided that Neon shall not be required to make any monetary payments to any zprime licensee to obtain the termination of its license. b. The Enjoined Neon Persons shall provide IBM with the source, object and executable code and listings for each and every version or release of zprime upon execution of the Settlement Agreement made as of May 29, 2011 by and between Neon and IBM and immediately thereafter destroy or cause to be destroyed all other copies of the source, object and executable code of zprime (and any similar code for software, product or device with functionality similar to that of zprime) from all computer systems and storage devices in their possession, custody or control (including, without limitation, Neon-owned computers and storage devices, personal and home computers and storage devices, and computer and storage devices in the custody of third parties), and will similarly destroy any such previously distributed code that is returned from customers or otherwise comes into their possession in the future; provided that Neon may retain source, object and executable code of zprime to the extent necessary for it to perform (and for the sole purpose of performing) any service or maintenance obligations required to be performed by it under the terms of any existing license agreement that any zprime licensee (in each case, as in effect on the date of this Permanent Injunction) refuses to terminate after the date of this Permanent Injunction so long as (1) Neon is not in breach of its obligations and agreements contained in the Settlement Agreement made as of May 29, 2011 by and between Neon and IBM and (2) such code is only retained for the period of time required to perform any such service or maintenance obligations. Within 10 days of the date of this Permanent Injunction, Neon shall certify under oath that Neon (including its subsidiaries, affiliates, and related entities) has complied with the destruction described above (taking into account the proviso in the immediately preceding sentence). Within 10 days of the date on which all zprime licenses have expired or been terminated, Neon shall certify under oath that Neon (including its subsidiaries, affiliates, and related entities) has complied with the destruction described above. If at any time after the date of this Permanent Injunction, source, object or executable code of zprime (or any similar code for any software, product or device with functionality similar to that of zprime) comes into Neon s possession, Neon will promptly (but in any event within 10 days of such receipt) certify under oath to IBM the identity of the person from whom Neon has received such code and certifying to its destruction. 4
8 Case 1:09-cv AWA Document Filed 05/31/11 Page 5 of 9 c. The Enjoined Neon Persons shall cease to provide support or maintenance for zprime (or any software, product or device with functionality similar to that of zprime); provided that Neon may perform any service or maintenance obligations required to be performed by it under the terms of any existing license agreement that any zprime licensee (in each case, as in effect on the date of this Permanent Injunction) refuses to terminate after the date of this Permanent Injunction. For the avoidance of any doubt, the terms of this Permanent Injunction do not require Neon to perform any service or maintenance obligation under any existing license. d. The Enjoined Neon Persons shall not, directly or indirectly, market, sell, license (including any renewal or extension of any existing license), install, distribute, export, import, offer to sell, offer to license, offer to install, offer to distribute, offer to export, or offer to import zprime (or any software, product or device with functionality similar to that of zprime). For the avoidance of any doubt, and notwithstanding anything to the contrary contained in this Permanent Injunction, Neon shall not renew, extend or transfer any existing zprime license or any warranty, maintenance or service period of any existing zprime license (or any portion thereof). e. The Enjoined Neon Persons shall not, directly or indirectly, develop, create, modify, retain or use any software, product or device the purpose or effect of which is to direct, route, transfer, enable or in any way facilitate workloads to be run on Specialty Engines (other than those expressly authorized in writing by IBM) or to circumvent IBM technological measures protecting Specialty Engines, Capacity on Demand or other Built-in Capacity; provided that Neon may only retain and use zprime as expressly provided in subparagraph (b) of Paragraph 1 of Section III of this Permanent Injunction. f. Neon shall (1) publicly announce on its website and by press release the immediate withdrawal of zprime from the market, which announcement shall specifically state that Neon (including its subsidiaries, affiliates, and related entities) pursuant to the terms of a Permanent Injunction, will not, directly or indirectly, market, sell, license (including any renewal or extension of any existing license), install, distribute, export, import, offer to sell, offer to license, offer to install, offer to distribute, offer to export or offer to import zprime or any software, product or device with functionality similar to that of zprime, (2) publicly announce on its website and by press release that:. The U.S. District Court has ruled that (1) only workloads expressly authorized by IBM may be processed on Specialty Engines (including ziips and zaaps) and (2) IBM s contracts, including the IBM Customer Agreement and the License Agreement for Machine Code, prohibit software (a) that enables workloads not expressly authorized by IBM to be 5
9 Case 1:09-cv AWA Document Filed 05/31/11 Page 6 of 9 processed on Specialty Engines or (b) that circumvents IBM s technological measures in Machine Code that protect the Builtin Capacity of Specialty Engines and enables workloads not expressly authorized by IBM to be processed on Specialty Engines. Neon has agreed to a permanent injunction under which it will withdraw zprime from the market and request that licensees and customers remove and destroy their copies of zprime. Neon will not renew, extend or transfer any existing zprime license or any warranty, maintenance or service period of any existing zprime license (or any portion thereof). and (3) further notify and provide its customers with a copy of the Permanent Injunction. g. The Enjoined Neon Persons shall not, directly or indirectly, disclose or transfer the source, object or executable code of zprime (or any similar code for any software, product or device with functionality similar to that of zprime) or any IBM z/os code obtained through decompilation or reverse assembly, in each case in whole or in part, directly or indirectly, to any person. Such prohibition shall prohibit the disclosure or transfer of zprime (or any software, product or device with functionality similar to that of zprime) and the source, object or executable code of zprime (or any similar code for any software, product or device with functionality similar to that of zprime) pursuant to a merger or a sale of assets or any other transaction. h. The Enjoined Neon Persons shall not, directly or indirectly, develop, create, modify or use any software, product or device the purpose or effect of which is to enable workloads to be run on Specialty Engines (other than those expressly authorized in writing by IBM) or to circumvent IBM technological measures protecting Specialty Engines, Capacity on Demand or other Built-in Capacity; provided that Neon may only retain and use zprime as expressly provided in subparagraph (b) of Paragraph 1 of Section III of this Permanent Injunction. i. The Enjoined Neon Persons shall not, directly or indirectly, reverse assemble, reverse compile or otherwise translate any IBM Program (as defined in the IBM Customer Agreement dated January 19, 2000, between Peregrine/Bridge Transfer Corp. (a predecessor of Neon) and IBM (including the related IBM License Agreement for Machine Code, collectively, the ICA )) or any portion thereof, except with the prior written consent of IBM. Notwithstanding anything to the contrary contained in this Permanent Injunction, to the extent not otherwise restricted and if the Enjoined Neon Persons otherwise have the right to do so, the Enjoined Neon Persons shall not be prohibited from reverse assembling or decompiling IBM code as an incident to debugging a product other than zprime; provided that such product is not, and does not include, any software, product or device with functionality similar to that of zprime. 6
10 Case 1:09-cv AWA Document Filed 05/31/11 Page 7 of 9 j. Neon shall comply in all respects with the terms and conditions of the ICA and any other agreement to which IBM (including its subsidiaries, affiliates, and related entities) and Neon (including its subsidiaries, affiliates, and related entities) are parties. k. The Enjoined Neon Persons shall not, directly or indirectly, disclose or transfer any know-how relating to zprime (or any software, product or device with functionality similar to that of zprime), in whole or in part, to any person. l. From the date of entry of this Permanent Injunction, any payments or other proceeds received on or after the date of this Permanent Injunction in respect of or relating to zprime (or any software, product or device with functionality similar to that of zprime) shall be segregated and held for the benefit of and forthwith transferred or paid over to IBM in the same form as received. Neon shall promptly provide IBM with the identity of any licensee or customer making any such payment or providing such proceeds. m. Neon shall take all steps necessary or advisable to terminate the Escrow Agreement dated September 20, 2010, among Neon, IBM and Austin Trust Company, and ensure the prompt return of the Escrowed Property (as defined in such agreement) to IBM. o. Neon and John Moores shall provide all other Enjoined Neon Persons with a copy of this Permanent Injunction and shall certify under oath within 10 days that all Enjoined Neon Persons have actual notice of its terms. p. The Enjoined Neon Persons have consented to personal jurisdiction in this Court and agreed to be bound by the terms of the Permanent Injunction. q. Counsel for the Parties and the Enjoined Neon Persons approve the form and substance of this Permanent Injunction. IV. GENERAL PROVISIONS 1. Compliance with Contracts. Nothing in this Permanent Injunction shall relieve Neon nor any Enjoined Party of its obligation to comply with all applicable contracts and agreements between the Parties, or with applicable Federal, State, and local laws and regulations. 2. Rights Against Third Parties. This Permanent Injunction does not limit, enlarge or affect the rights or obligations of any Party to this Permanent Injunction as against any third parties. 7
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