IBM United Kingdom Limited v LzLabs GmbH & Ors.

Disclosure applications should be determined by reference to relevance, reliability, reasonableness and proportionality. Where recordings are potentially relevant, automated transcription followed by targeted searches and review may be an appropriate first stage, even though transcription may omit material through error. A party seeking relief for inadequate extended disclosure must first show that there has been, or may have been, a failure to comply; the court then considers whether the proposed remedy is reasonable and proportionate. General suspicion is insufficient, but evidence that restricted searches have produced an unduly narrow result may satisfy the threshold. The court may order further searches without finding intentional or negligent non-compliance. Requests for further information should clarify a pleaded case where the information relates to an issue and is properly required, while applications seeking to control future evidence or submissions require exceptional justification.

This was the fifth case management conference in a technology dispute concerning alleged reverse engineering and copying of IBM mainframe software in the development of LzLabs’s Software Defined Mainframe. The claimant sought contractual and tortious relief against five defendants. The applications concerned disclosure of recordings, historic software versions and backup tapes, IBM’s customer-support repository, further searches, extended-disclosure compliance, particulars of deliberate concealment and technical allegations, further information about an agent programme, and restrictions on references to separate United States proceedings.

The central questions were whether the requested disclosure and information orders were reasonable and proportionate, whether the threshold for relief under Practice Direction 57AD was met, and whether a broad restraint on future references to the Neon proceedings was justified.

1. Disclosure of recordings. The recordings were potentially relevant and had been included in the parties’ disclosure document. The proportionate first step was for the defendants to obtain automated transcripts of all recordings, apply key search terms, and then review responsive material for relevance, confidentiality and privilege. The risk of inaccurate transcription was acceptable at that stage. The claimant could later identify gaps or propose a better method.
2. CPX and backup tapes. Earlier orders required disclosure of all versions of the CPX tool in the defendants’ possession or control. Restoring and disclosing 35 located backup tapes was not unreasonable or disproportionate because CPX material was critical to the central reverse-engineering issue.
3. CSP searches. The claimant had agreed to search its central support repository. The defendants’ reduced keyword proposals were a sensible starting point, subject to review for relevance and proportionality.
4. Extended disclosure. Under Practice Direction 57AD, the court applied a threshold inquiry followed by a reasonableness and proportionality inquiry. General suspicion about limited disclosure did not suffice. The narrowed searches for Mr Anzani and Mr Knight, however, produced sufficiently limited responsive results to indicate that there may have been an inadvertent failure to comply. The court ordered the searches to be rerun, but refused an order for a further witness statement.
5. Further information and restraint. The claimant had to provide particulars addressing deliberate concealment and date of knowledge, and further information on its technical allegations and the agent programme. The application to restrain future reference to the Neon proceedings was refused. The court had wide powers to control evidence and submissions, but such broad orders were appropriate only in extreme cases. The current premise for the injunction was not established, although future reliance on the material could be challenged on its merits.