Reuters A federal appeals court on Tuesday overturned a judgment requiring IBM to pay rival BMC Software 1.6 billion, after a judge found IBM improperly replaced BMC39;s mainframe software at ATT with its own.

The 5th U.S. Circuit Court of Appeals in New Orleans said a lower court judge39;s determination concerning liability was in error. Writing for a threejudge panel, U.S. Circuit Judge Edith Jones said ATT, one of BMC39;s biggest clients, had switched to IBM software independently and that BMC had lost out to IBM fair and square.

A BMC spokesperson declined to comment. An IBM spokesperson said in a statement that the company acted in good faith in every aspect of this engagement and is grateful the court agrees.

Representatives for ATT, which is not a party to the case, did not immediately respond to a request for comment.

Houstonbased BMC develops and licenses proprietary mainframe software products. Under an agreement, IBM can maintain and operate mainframes running BMC software with a nondisplacement provision that limits IBM from switching BMC clients39; software to IBM39;s, the ruling said.

ATT hired IBM to manage its mainframe operations. BMC39;s lawsuit in Houston federal court accused IBM of breaching their contract when ATT abandoned its software for IBM39;s.

Tuesday39;s ruling overturned U.S. District Judge Gray Miller39;s 2022 decision that IBM owed BMC 1.6 billion in damages for breaking their agreement. Miller said IBM had already secretly agreed to…