IBM United Kingdom Limited v LZLabs GmbH & Ors

The High Court’s equitable power to grant injunctions is wide, but its exercise remains discretionary and principled. Where unlawful conduct has tainted a product, and damages would be difficult to ascertain or quantify, an injunction may prohibit its marketing, sale, dissemination and related services. The court may frame relief globally where territorial limits would permit circumvention. Declarations are discretionary and appropriate where they resolve a disputed issue and serve a useful purpose. A successful party will not ordinarily suffer a costs reduction merely because it failed on some issues. Indemnity costs require conduct unreasonable to a high degree or otherwise outside the norm. Payments on account should be cautious estimates of likely recovery. A stay pending appeal depends on the real prospect of success and the balance of injustice between the parties.

This was a consequentials hearing following the liability judgment in [2025] EWHC 532 (TCC). IBM had succeeded against LZLabs GmbH, Winsopia Limited and John Jay Moores for breaches of the ICA, procurement of breach and unlawful means conspiracy. Claims against LzLabs Limited, Mark Jonathan Cresswell and Thilo Rockmann had failed.

The court determined the form of delivery-up and destruction orders, injunctions concerning the SDM software, restrictions on use of information derived from ICA breaches, declaratory relief, quantum directions, costs, payment on account, permission to appeal and stays. The central issues were whether the proposed relief was just and proportionate, whether a declaration served a useful purpose, and how the unsuccessful and partially successful issues should affect costs.

1. Injunctions. Section 37(1) of the Senior Courts Act 1981 confers a broad power to grant final or interlocutory injunctions where just and convenient. The power is equitable and discretionary, and must be exercised according to settled principles. It is not invariably dependent on an existing cause of action. Relevant considerations include the adequacy of damages and the utility and proportionality of the order.
2. The SDM had been developed or improved through reverse engineering, misuse of ICA Program code and other breaches. It was therefore tainted, and its use created continuing infringement or loss of customers. Damages would be difficult to ascertain and quantify. A prohibition on marketing, sale, dissemination and related services was consequently just and proportionate. The injunction was not confined to the United Kingdom because the relevant conduct and misuse were international and territorial limits could readily be circumvented. Existing customer contracts could continue for a ten-month run-off period. The court refused wider notification orders as unnecessary, overreaching and oppressive.
3. The defendants were ordered to deliver up or destroy ICA Programs, subject to preservation arrangements for the UK and US proceedings. Destruction was to be supervised by an independent forensic IT firm, with sworn certificates of compliance. The defendants were also prohibited from using or relying on information derived from ICA breaches.
4. Declarations. Under CPR 40.20, a declaration should be granted where it is just, serves a useful purpose and resolves a disputed issue. A declaration that IBM had lawfully terminated the ICA was granted. Other declarations were refused for lack of clarity or because they were unnecessary.
5. Costs. IBM was the successful party against the First, Second and Sixth Defendants. Failure on 11 of 51 technical breaches did not justify an issue-based order or proportionate reduction because IBM succeeded on the principal categories and issues. The three defendants were jointly and severally liable. Indemnity costs were refused: the underlying wrongdoing and hard-fought conduct did not make the defence unreasonable to a high degree or outside the norm.
6. A payment on account of £20 million was ordered. The figure was a cautious broad-brush estimate in light of the absence of costs budgeting and the limited information available. Permission to appeal was refused under CPR 52.6 because the proposed grounds disclosed no real prospect of success or other compelling reason. The SDM injunction was stayed pending disposal of any Court of Appeal appeal, but the delivery-up, destruction and information-use orders were not stayed.

The judgment followed the liability decision in [2025] EWHC 532 (TCC), which gave judgment for IBM against the First, Second and Sixth Defendants and dismissed the claims against the Third, Fourth and Fifth Defendants. Permission to appeal from the liability judgment was refused in this judgment. The injunction concerning the SDM was stayed pending any appeal to the Court of Appeal.