IBM’s Legal Momentum Continues With Supreme Court Victory Over BMC, But Retail Sentiment Is Cooling

Shares of International Business Machines Corp. (IBM) edged higher in pre-market trade on Tuesday after reaching an all-time high in the previous session, even as broader markets struggled.

The stock’s resilience follows back-to-back courtroom victories. 

Late Monday, IBM scored a legal victory in the U.S. Supreme Court, which declined to reinstate a $1.6 billion award against the company in a case brought by BMC Software, which is owned by KKR & Co. 

BMC accused IBM of breaching a licensing agreement by replacing BMC’s software with its own while servicing their mutual client, AT&T.

In 2022, a Texas federal court ruled in favor of BMC, awarding over $1.6 billion in damages.

The U.S. Court of Appeals for the Fifth Circuit overturned the lower court's ruling in 2024, stating that AT&T independently chose to switch from BMC's software to IBM's, thus absolving IBM of wrongdoing.

It said that IBM was within its rights to make the software swap if AT&T requested it. BMC argued that the decision gave IBM undue control over its software, while IBM maintained that the dispute involved state law and did not warrant a Supreme Court review. 

Now, the Supreme Court justices, without comment, refused to hear BMC’s appeal.

This comes after IBM secured another legal win on Monday in the U.K. against U.S. tech entrepreneur John Moores and his firm, LzLabs, over allegations of trade secret theft. 

The ruling largely favored IBM, with the court finding that LzLabs and Moores unlawfully procured breaches of IBM’s software license.

Despite IBM’s legal victories, retail sentiment around IBM’s stock moved lower to ‘bullish’ from ‘extremely bullish’ a day ago, as chatter increased slightly.

One user predicted IBM’s stock would fall below $200.

IBM shares have climbed over 30% over the past year and are up over 15% year-to-date.

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Read also: IBM’s Stock Hits Record High As Retail Traders Cheer Trade Secrets Lawsuit Win