By Blake Brittain

March 10 - The U.S. Supreme Court on Monday declined to take up a contract dispute between IBM IBM.N and rival BMC Software that previously resulted in a $1.6 billion judgment for BMC.

BMC had asked the justices to reconsider a U.S. appeals court's decision that overturned its win against IBM. BMC had persuaded a lower court judge that IBM unlawfully replaced BMC's mainframe software at AT&T T.N with its own, but the 5th U.S. Circuit Court of Appeals threw out the award last year, ruling that BMC had "lost out to IBM fair and square."

Spokespeople and attorneys for BMC and IBM did not immediately respond to requests for comment. Spokespeople for AT&T, which was not involved in the case, also did not respond to a request for comment.

Houston-based BMC develops and licenses proprietary mainframe software products. BMC and IBM had an agreement that allowed the latter to maintain mainframes running BMC software with a "non-displacement" provision, which limited IBM from switching BMC clients' software to its own software.

AT&T hired IBM to manage its mainframe operations. BMC filed a lawsuit in Houston federal court accusing IBM of breaching their contract when AT&T abandoned its software for IBM's.

U.S. District Judge Gray Miller said in 2022 that IBM owed BMC $1.6 billion in damages for breaking the agreement. Miller said IBM had secretly agreed to replace BMC's software at AT&T when it negotiated the non-displacement provision in 2015.

The 5th Circuit overturned the decision in April last year, finding that AT&T chose to replace its mainframe software independently of IBM's influence.

BMC argued in its Supreme Court appeal that the 5th Circuit's decision would "do lasting damage to businesses throughout the Fifth Circuit — especially in the technology space, where license restrictions are common and necessary."

IBM asked the justices to deny BMC's petition and "bring BMC's quest to revive a windfall judgment to a definitive end."

The case is BMC Software Inc v. International Business Machines Corp, U.S. Supreme Court, No. 24-569.

For BMC: Jeff Oldham of Bracewell

For IBM: Paul Clement of Clement & Murphy

Read more:

Judge says IBM owes $1.6 billion to BMC over software contract

IBM wins reversal of $1.6 billion judgment to BMC over software contract

(Reporting by Blake Brittain in Washington)