IBM Sued for Breaching Contract for Finding New Cloud Provider

IBM was sued earlier this week by Innovative Web Ventures for breach of contract arising from IBM changing its cloud technology provider. Innovative Web Ventures is “an information-technology and web development company that provides licensed software and consulting services to its various clients.” Innovative Web Ventures is represented by Desouza Law. The case was filed before the Florida Southern District Court.  

IBM hosted Innovative Web Ventures’ software via its cloud hosting service. When Innovative Web Ventures licenses its software, the customers access their software via IBM’s cloud servers. Innovative Web Ventures does not have a physical copy of its software; the company’s developers edit and update the software as stored on IBM’s cloud servers.

IBM sent letters to Innovative Web Ventures’ predecessor, Bluebeam Holdings, notifying the company that IBM was in the process of discontinuing use of Verizon’s legacy cloud centers and as a result, would no longer host Innovative Web Ventures’ software after January 31. IBM suggested moving the software and data from the legacy service to IBM’s own cloud service, IBM Cloud. According to the complaint, Innovative Web Ventures made arrangements to shift data from the old cloud service to IBM’s cloud service; IBM sent Innovative Web Ventures an estimate for moving the software and data and for hosting the content. Innovative Web Ventures signed an agreement and was in contact with IBM to make sure the migration process was on track.

By mid-January, Innovative Web Ventures became concerned about the approaching deadline and continued to reach out to IBM for status updates, upon which IBM purportedly told Innovative Web Ventures that the deadline was extended to the end of February and that everything was moving as planned. However, on February 7, “all of Plaintiff’s websites and access to Defendant’s servers suddenly went offline/became unavailable. This included all of Plaintiff’s customers’ access to the servers and all implementations of the Software.” Innovative Web Ventures contacted IBM, who allegedly said it was looking into the situation, but did not explain why this had occurred.

The complaint stated it was discovered that “Defendant’s representatives lied to Plaintiff when they represented that the migration deadline had been extended through the end of February 2020. In reality, Plaintiff’s account with Defendant was deactivated on or about February 1, 2020 and subsequently ‘decommissioned’ on February 7, 2020.” The complaint stated that the decommissioning was not an automatic feature; rather, an IBM representative entered the request. The request “resulted in the permanent deletion of all of Plaintiff’s Software and data that was hosted on Defendant’s servers,” despite IBM’s assertion that everything was moving along as scheduled and the deadline was extended. Consequently, Innovative Web Ventures does not have a copy of its software or related data. “This means that approximately 15+ years of development were erased in an instant and tens of thousands of end-users are now wholly unable to utilize the Software as all access thereto has been cut off.” IBM has not communicated with Innovative Web Ventures about the deletion; it appears to be in the process of determining who was responsible for deleting the content.

As a result of the deletion, Innovative Web Ventures alleged it has suffered a significant financial loss it alleged its loss to be between $75 million and $150 million, which includes the cost of development, and loss of current and future license fees and customers. The plaintiffs accused IBM of breaching contract for the migration process and hosting, stating the contract was broken once IBM deactivated and permanently deleted Innovative Web Ventures’ software and data as a result of the failed migration. Innovative Web Ventures has also alleged that IBM falsely represented the extended deadline and that the migration was on schedule. Innovative Web Ventures has claimed that IBM was grossly negligent in the migration effort and subsequent deletion. Counts against IBM also include conversion and prima facie tort.

Innovative Web Ventures has sought compensation for loss and damages and other relief.