Fast400 Founder Sues Big Blue

If you have been watching the battle of wits and mind share between OS/400 server maker IBM and the various companies that have marketed the Fast400 green-screen governor buster, you will be interested to learn that the founder of the company that made Fast400 has revealed his secret identity, as well as that of his clever programmer, as part of a lawsuit that he filed on May 17 against IBM.

The lawsuit was brought to our attention by Jim Stracka, founder of iSeries security specialist PentaSafe (now part of NetIQ). As it turns out, way back in 2001, after Stracka sold PentaSafe to NetIQ, he launched a tiny company called Tiger Tools, which he based in Pennsylvania, and which he ran under the assumed name of Chance Taylor. Stracka hid his own identity as well as that of his head programmer, who is named Leif Svalgaard in the suit. Svalgaard is the best known machine-level language programmer in the OS/400 world (certainly outside of IBM, and maybe inside the company as well). He has more than 40 years of hard-core programming experience on all kinds of computing systems. Svalgaard is probably best known as the guy who created an online machine-level programming manual, which is effectively the bible for OS/400 propellerheads and bit twiddlers who want to code down below the Technology Independent Machine Interface (TIMI), which is one of the hallmarks of the AS/400 system. Stracka and Svalgaard concealed their identities for fear of recrimination from IBM. But to sue IBM, their identities had to be revealed.

Since late 2001, readers of this newsletter have followed the soap opera of IBM versus the people behind Fast400 (as “Tiger Tools,” and then as “Software Solutions Group,” which is based on the man-made island off the coast of Wales called Sealand), who sold Fast400 to the OS/400 server base while IBM tried to stop Fast400, both technically and legally, from working with OS/400. (See the stories listed at the bottom of this page for more background.) I am uncertain of the legal or ethical tenets of IBM’s 5250 pricing practices, but I have, as you all well know, abhorred the interactive software tax and the 5250 governors. But being uncertain about the legality of what IBM is doing also means it is hard to be sure of the legality of what Fast400 is doing. As I have said before, if IBM had thought of a better way to price 5250 capacity, a way that was not so wickedly expensive, Fast400 would not have been created.

I never could understand why IBM didn’t sue the people behind Fast400 from the get-go, and maybe IBM is not so sure it could convince a judge or a jury of the legality of its OS/400 pricing or the illegality of what Fast400 does to OS/400 servers. I can tell you that after reading the Stracka-IBM court papers in their entirety, I am baffled about why IBM didn’t make its case in civil court, business to business, like The SCO Group is doing to IBM right now. Instead, last November, IBM brought in the U.S. Attorney’s office and the FBI, alleging that Stracka tried to extort $25 million out of Big Blue in exchange for the Fast400 tools.

What Stracka’s lawyers say in the lawsuit, which was filed in Harris County, Texas, on May 17, is that Stracka, Svalgaard, and an intellectual property lawyer met with IBM’s chief in-house counsel, Ron Lauderdale, as well as other IBM representatives, in a Houston hotel room to prove that Svalgaard had invented Fast400 and that Stracka was the owner of this technology. According to the filings by Stracka’s lawyers, they went to Houston with the express purpose of negotiating the sale of Fast400 to Big Blue, which is perfectly legal. (Selling a company or a product to a competitor that wants you out of the market is perfectly legal. Asking for money to stop an action that is illegal is extortion. This fine point of definition and the resulting laws are at the heart of this lawsuit.)

Apparently to IBM’s thinking, the Fast400 product could only have been written (and tweaked as IBM put on “tiger balm” into OS/400 patches to try to thwart Fast400’s operations) by someone who had illegal access to the source code inside OS/400; whether it was original source code or decompiled source code is unclear to me. IBM’s interpretation of the many exchanges that went on between Stracka and Lauderdale from late 2001 until that meeting on November 25, 2002, is that Stracka was trying to extort $25 million from IBM to stop selling Fast400. Stracka contends that he was trying to negotiate with Big Blue to sell his company, which makes a product that enhances OS/400 server performance, and which was not created through the use of source code or by decompiling binary code into source by Svalgaard. IBM went to the U.S. Attorney’s Office for the Southern District of New York, explained the situation, got a warrant for Stracka’s arrest, and the FBI accompanied Lauderdale to that Houston hotel room. According to Stracka, the FBI actually burst into the room with guns drawn in the middle of the meeting. (And you thought the OS/400 market was boring!) Stracka was arrested and thrown in jail until he posted a $500,000 bond the next day.

(All of this was going on behind the scenes as IBM revamped the iSeries line to move to an all-or-none approach to 5250 green-screen processing, which debuted as the revamped iSeries line in January 2003.)

However, the allegations made by IBM still hung over Stracka’s head, so he hired New York law firm Morivillo, Abramowitz, Grand, Iason & Silverberg, which filed a brief on his behalf on March 24, 2003, explaining that the charges should be dropped. According to a response from IBM to Stracka’s May 17 lawsuit–which seeks damages for injury to his feelings, reputation, and character, as well as for mental anguish, lawyers fees, lost business opportunities, and having been falsely charged for a criminal offense and incarcerated–the Assistant U.S. Attorney handling the Stracka case was re-assigned and the replacement attorney given the case was unfamiliar with the case and, “due to timing concerns,” the case was voluntarily dismissed without prejudice. Stracka sued after this, but kept the suit quiet.

Because Stracka lived in San Diego, IBM is located in New York, and the confrontation between the two happened in Houston, the suit was moved from a Texas state court to a Federal jurisdiction (any trans-state suit has to be moved to Federal court). The case is being heard in the U.S. District Court for the Southern District of Texas, in Houston. IBM filed a response to the complaint with Federal District Judge Kenneth Hoyt and also filed a motion to dismiss the suit. Stracka’s lawyers in Texas, Ronald Krist and Finis Cowan, of eponymous law firms based in Houston and Dickinson respectively, filed a response to the motion to dismiss. IBM did not, as is customary, file a reply to the response by Stracka’s lawyers. On August 9, Judge Hoyt denied the motion to dismiss. The case will now move forward, and the trial is scheduled for the middle of July 2005.

I chased up and down the channels inside IBM for a comment, and got the customary response. “We will not comment on ongoing litigation,” Sandra Dressel, a spokesperson with IBM’s Systems Group, was instructed to tell me. (All I have to say to that is, IBM’s gums have been flapping pretty hard in the SCO case, and IBM’s outside lawyers, Cravath, Swaine, and Moore, would talk for hours at a time with my peers who were covering the rescinding of the 1956 Consent Decree in the 1990s. IBM comments when it suits its purposes, and not commenting is not really a strict policy at Big Blue.)

One last thing: the Stracka-IBM lawsuit has come to light only weeks after I was contacted by Ronald Lerma, vice president of sales and marketing for California Sales Company, and was told that his firm was taking over the marketing of Fast400 in the United States. According to Lerma, he was putting together a new Web site to promote the product, and said that it would work to unlock the 5250 processing capacity latent in AS/400 and iSeries machines running OS/400 V5R1, V5R2, and i5/OS V5R3, as well as on earlier operating systems. The company’s Web site is not operational yet, and next week I will try to get to the bottom of what is happening with CSC and Fast400.

Top Fast400 stories, in chronological order:

October 29, 2001: “TigerTools Says It Can Remove OS/400 Governors”

November 5, 2001: “IBM Issues a Statement on TigerTools’ Fast400”

November 26, 2001: “Fast400 Governor-Buster Code Changes Hands”

December 3, 2001: “IBM Tries to Crush Fast400 with PTF Patches”

May 13, 2002: “SSG Relaunches Fast400 Governor Buster for OS/400 Servers”

June 3, 2002: “IBM Fights Fast400 Governor Buster with Licensing Contracts”

February 24, 2003: “FAST400 Undaunted by Revamped iSeries Line”

July 7, 2003: “Market Insight: IBM, FAST400, and ‘The Matrix Reloaded’ “