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David and Goliath Battle Heats Up Between IBM, FAST400GMI
........................................................................................................................... BAKERSFIELD, CA---A legal, ethical and technological showdown is brewing in California between IBM and the makers of FAST400, a software marketed to mid-range users of IBM’s AS/400 and iSeries machines. The battle, borne out of customer advocacy on the part of FAST400 and its distributors, promises to be precedent setting. With trial expected later this year in Federal Court of the Southern District of Texas, the makers of FAST400, and their legal representatives, allege that IBM maliciously prosecuted the software’s developers in an effort to suppress competition. FAST400’s developers further contend that IBM has intimidated customers from utilizing the software in order to retain their market share in the mid-range computer industry. “We find it unacceptable business practice to stifle natural competition in such a mercenary fashion as IBM appears to have done”, Ron Lerma CEO of the California Sales Company said. “Furthermore, we feel an obligation to our customers to act as their advocates and to insulate them from an out-moded and unfair pricing scheme applied to performance they already own”. Established in 1989, the California Sales Company is a distributor of software products and peripherals aimed at the mid-range computing market and users of large systems throughout the corporate community. Since 2003, the company has marketed and distributed the software program called FAST400 which is designed for use with IBM AS/400 machines. It was developed by Leif Svalgaard and released by Jim Stracka through a company called Tiger Tools. Also in 1989, International Business Machines (IBM) introduced the AS/400 computer system. The IBM iSeries/400 is called the most successful business system ever to have been introduced in a multi-user commercial systems environment. More than 700,000 units have been sold worldwide and they can be found in over 93% of Fortune 100 industries. The FAST400’s developers have been embroiled in an ongoing legal battle with IBM over the product. While the details of this litigation have been covered by industry-specific publications such as “Computer Business Review” and “iSeries Network”, the mainstream stress has largely ignored the issue. FAST400 is a software product that provides AS/400 and iSeries users full access to their system’s capabilities by overcoming artificial impediments placed into the systems through the use of a CFINT (or Governor). Until FAST400’s introduction, users could only purchase hardware upgrades, directly from IBM and at costs of up to $1,000,000., to make use of their system’s full processing capabilities. IBM contends that FAST400 was developed illegally and that use of it creates a licensing violation on AS/400 and iSeries computers. In November of 2002, IBM arranged a meeting with FAST400’s developers on the pretext of purchasing the software. FAST400’s Jim Stracka and Leif Svalgaard attended this meeting with an intellectual property attorney as their representative. Stracka was arrested by FBI agents who had accompanied IBM’s representative, wrongfully charged with extortion and forced to satisfy a $500,000. bond. Actions such as IBM’s in soliciting Stracka’s arrest by the U.S. Attorney present a severe threat to our competitive system, Lerma says. If successful, IBM’s tactics would have the effect of chilling potential competition by small entrepreneurs. Stracka, the makers of FAST400 and their primary distribution mechanism, The California Sales Company, have promised to fight back. In a civil suit, filed in 2004 and claims malicious prosecution, Stracka takes IBM to task for their tactics and vows to keep FAST400 alive and available to customers who continue to support both him and the software. FAST400 is a software program that was designed specifically for use with IBM’s AS/400 and iSeries computers. It allows users to utilize the full hardware capacity of their own computers without the need for expensive “upgrades” from IBM. FAST400 developers assert that when IBM was unable to stop FAST400 by shutting down its web site, IBM attempted to destroy FAST400 by making false statements to the U.S. Attorney’s office concerning the product and its developers, causing Stracka to be arrested and jailed for alleged extortion. In November of 2002, Jim Stracka retained the services of the eminent firm of Fulbright & Jaworski to represent them in negotiations with IBM after IBM expressed an interest in purchasing the FAST400 technology. They agreed to meet with IBM’s in-house counsel, Ron Lauderdale, in Houston, Texas, to discuss the terms of a possible sale. It turned out, however, that IBM’s expressed interest in purchasing FAST400 was merely a pretext. When Lauderdale showed up for the meeting, he was accompanied by the FBI. Stracka was arrested at gun point, charged with attempting to extort $25 million from IBM, and jailed with a bond set at $500,000. The charges were dismissed after Stracka's attorney presented compelling evidence of his innocence. Citing mental anguish, attorney’s fees, lost business opportunities, and having been falsely charged for a criminal offense and wrongly incarcerated, Stracka filed a civil suit against IBM in May of 2004. The case was removed to the U.S. District Court for the Southern District of Texas in Houston, where IBM tried unsuccessfully to have the suit dismissed. The case has been set on the trial docket for November 2005, and the outcome will directly impact both IBM’s customers and users of FAST400. Not unlike a governor installed on motor-scooters, IBM’s iSeries systems are delivered with a CFINT software module that artificially suppresses CPU interactive processing capacity. IBM's charges to customers to overcome these artificial impediments can run to hundreds of thousands, even millions, of dollars, making such “upgrades” impossible for many iSeries owners. IBM’s practice of charging substantially more to use the iSeries CPU for interactive processing than for batch processing has been a sore spot with customers since the pricing scheme's introduction in 1996. Most of California Sales Company's small business customers bitterly resent what they regard as IBM's "interactive tax" on their ability to use the full hardware capacity of their own computers, despite the fact that the hardware capacity is not subject to either patent or copyright protection. The CFINT module detects when an application starts interactively and uses CPU capacity. The CFINT then acts to artificially limit that capacity to a preset amount, preventing the user from using the full system hardware capacity. FAST400 enables the AS/400 user to regain the use of the full hardware capacity of its computer. IBM contends that FAST400 was developed illegally. The developers of FAST400 assert that it is proper for someone to study a product to learn the ideas and functions embodied in computer software and then use that knowledge to create other software to interoperate with and enhance the system. Stracka and Svalgaard assert that this is precisely what was done in developing FAST400, and that IBM's complaints that it is illegal are simply wrong. The entire story of the battle over FAST400 can be downloaded in Acrobat Reader format by clicking (www.pamelahennessy.com/fast400.pdf).
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