A Chinese tech company claims that IBM “played a bait-and-switch game” that undermined a joint venture and diverted business to a competitor.
Beijing TeamSun Technology Co. and the joint venture, Beijing Neu Cloud Oriental System Technology Co., sued Armonk-based International Business Machines Corp. on Sept. 13 in Westchester Supreme Court.
TeamSun said it raised $210 million to invest in the joint venture but IBM and two affiliates “acted in bad faith … and were able to misappropriate the benefits of TeamSun’s good faith efforts.”
IBM spokesman Chris Mumma responded in an email that the company “will vigorously defend itself against these claims.”
TeamSun describes itself as a leading information technology company in China and Southeast Asia that develops products based on IBM servers.
In 2014, TeamSun and IBM established the Neu Cloud joint venture and a strategic plan code-named TOP, according to the complaint, “to further open up the Chinese market” for IBM hardware and software.
TeamSun said it raised about $210 million for TOP from private investors. It helped IBM get favorable treatment from the Beijing municipal government and it submitted confidential customer information to IBM.
IBM provided key technical assistance.
“Without a joint venture with IBM,” a TeamSun official stressed in a 2014 email to an IBM official, “there can be no TOP project.”
TeamSun was concerned that IBM would also collaborate with INSPUR Co. Ltd., a major competitor, but an IBM official allegedly assured TeamSun that there were no discussions with INSPUR regarding software source code or database products.
In 2017, INSPUR announced that it had established a joint venture with IBM to develop server products, according to the lawsuit. IBM notified TeamSun that the INSPUR joint venture would become the exclusive dealer of server products in China, as of May 2018.
When Neu Cloud tried to buy IBM products after that date, according to the complaint, IBM told the company to contact the INSPUR joint venture. IBM also allegedly proposed that Neu Cloud collaborate with INSPUR.
TeamSun also claims that INSPUR used Neu Cloud’s confidential information to notify customers that it was now the exclusive dealer of IBM products.
TeamSun accused IBM of unfair competition, unjust enrichment, breach of fiduciary duty, breach of agreement and tortious interference.
It is demanding unspecified damages and an injunction ordering IBM to fulfill its contract obligations.
TeamSun is represented by Manhattan attorney Jarman D. Russell.
