Former Chinese partner sues IBM for stealing trade secrets

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The complaint accuses Big Blue of “fraudulent and unfair business practices”.

Last week, Beijing Neu Cloud Oriental System Technology Co sued IBM Corp and its Chinese subsidiary in Manhattan federal court lfor allegedly stealing its trade secrets, according to Reuters. Neu Cloud is a joint venture established to sell IBM server products in China.

Neu Cloud said in the complaint that IBM gave confidential customer information from their partnership to a rival joint venture it later formed with another Chinese company.

IBM didn’t immediately respond to a request for comment, nor did Neu Cloud attorneys.

How IBM forced Neu Cloud to become “completely reliant” on them

The complaint said IBM China and its Beijing-based distributor Beijing TeamSun Technology, formed Neu Cloud in 2014 to “further open up the Chinese market” for hardware and software based on IBM’s Power Systems servers.

The complaint claims this agreement made Neu Cloud “completely reliant” on IBM for its supply and gave IBM “substantial control” of its operation. According to Neu Cloud’s complaint, its parent company TeamSun had been a distributor and implementor of IBM POWER technology since 2010.

“Between 2010 and 2014, reliant on its relationship with IBM, and at substantial expense, TeamSun developed technology solutions dependent upon IBM Power Systems products and actively marketed them in China,” the complaint states.

TeamSun eventually created Neu Cloud to keep its Power Systems business bubbling. In July 2014, IBM even took a 19.35 per cent stake in Neu Cloud. Neu Cloud, in return, promised to only buy power systems from IBM. But in 2017 IBM and Inspur created a joint venture of their own called Inspur Power. Neu Cloud’s complaint claims that JV ended its deal to buy Power Systems kit from IBM, and they then had to buy from Inspur Power instead.

Neu Cloud wants damages, punitive damages, and an injunction prohibiting the illegal conduct described in the complaint. “We will vigorously defend ourselves against these claims,” a spokesperson from IBM told The Register.