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Apple hires ex-IBM chip designer/blade guru, IBM sues

updated 03:00 am EDT, Fri October 31, 2008

Apple hires IBM chip exec

An ex-IBM chip design expert is expected join Apple next month, but is facing a lawsuit from his former employer that could block his employment with the Cupertino-based company. According to the complaint, former IBM executive Mark Papermaster will join in Apple as a senior executive in what could be an attempt to make new inroads into the server market and/or bolster the company's Xserve line up. Papermaster, expected to work closely with Apple CEO Steve Jobs, is being sued by IBM to block his employment at Apple and prevent him from divulging trade secrets related to IBM's Power chips and server products.

For the last two years, the "blade server guru" been part of what the company calls IBM's elite I&VT (Integration and Values Team), which includes the 300 senior managers of the company. Blade servers not only allow companies to more densely pack processing power into a single computer, but also energy and space as well as offer flexibility in investments. In addition, Papermaster has authored several papers on chip development at IBM and has worked as Vice President of IBM's Blade Development Unit, which focuses on building highly efficient servers based on technologies other than Power. The complaint specifically calls out Papermaster's (confidential) knowledge of blade servers and related manufacturing, research, and innovation.

In addition, the complaint describes the exec as a "top expert in Power architecture and technology" and says that Papermaster is "one of IBM's top executives who is possession of significant and highly-confidential IBM trade secrets and know-how, as well as sensitive information regarding business strategy and long-term opportunities." IBM's Power architecture includes a series of microprocessors that are used as the main CPU in many of IBM's servers, minicomputers, workstations, and supercomputers.

While Apple reportedly refused to comment on the lawsuit or confirm the employment offer, IBM issued a statement saying that Papermaster's employment by Apple is "a violation of his agreement with IBM against working for a competitor should he leave IBM. We will vigorously pursue this case in court."

IBM believes that Papermaster's employment violates a 7-page non-compete he signed in which he agreed not to be employed by a competitor for at least 12 months. The complaint alleges that both Apple and IBM are competitors in enterprise server, consumer PC, and microprocessor markets and that Apple's recent acquisition of PA Semi, creates new competition between the companies. Apple CEO Steve Jobs said that its PA Semi acquisition was focused on the engineering talent pool and that the company would use those technologies to further differentiate its handheld devices (including the iPhone and iPod) -- a point also underscored in the complaint. (Papermaster's expertise could be used to bolster PA Semi's current initiative: a specialized ARM-based iPhone chip.)

The complaint further notes that IBM's own PowerPC chips, which were used in Macs until the Intel/x86 transition few years ago, are used in video game consoles and alleges that PA Semi manufactures chips that could be used in the same markets.




by MacNN Staff

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Comments

  1. Guest

    Joined: Dec 1969

    +1

    non-compete agreements

    ...don't usually hold up in court, do they?

  1. cal6n

    Joined: Dec 1969

    +1

    Yay!

    G6, come on down!

  1. bhuot

    Joined: Dec 1969

    +3

    NDA

    Why don't they just make him sign a NDA? I don't understand how it is legal for someone to not be able to work for a competing company just because they know trade secrets.

  1. testudo

    Joined: Dec 1969

    +1

    Re: NDA

    It is legal if you sign a contract that says "I won't do this when I leave". You don't like the terms, don't sign the contract.

    And they do up in court.

  1. Bobfozz

    Joined: Dec 1969

    +1

    Time Limits

    Apple will probably pay Papermaster to cool his heels for up to a year while this is being worked out. Thus, no trade secrets need to be revealed, etc. 12 mos. is usually enforceable in a non-compete. Time moves quickly in the tech industry.

  1. Guest

    Joined: Dec 1969

    +2

    Not in CA

    Not enforceable in CA, according to Wikipedia.

  1. eldarkus

    Joined: Dec 1969

    +5

    re: Testudo

    Opps.. thanks Guest! beat me to itThe majority of U.S. states recognize and enforce various forms of non-compete agreements. A few states, such as California, totally ban or prohibit non-compete agreements except in limited circumstances. For this reason, non-compete agreements have been popular among companies with employees working in states where they are allowed.

  1. OtisWild

    Joined: Dec 1969

    -1

    IBM not in CA

    Are noncompete clauses enforceable in Armonk, NY? Cuz that's probably the jurisdiction that applies in this situation..

    Even so, noncompete clauses are BS, unless you're guaranteed a salary for the length of time of the contract...

  1. UberFu

    Joined: Dec 1969

    -1

    aside from all of that,,,

    if I recall - if this has anything to do with POWER architechture - Apple and Motorola both had a hand in the development. So unless both companies have signed away their right to dabble - then IBM has no case on those grounds.

    However - this smells more of political manuevering as someone at IBM has a bone to pick with Papermaster.

  1. Guest

    Joined: Dec 1969

    +1

    Usually thrown out in CA

    He did sign NDA. But that's not what this is about I agree. Usually non-compete doesn't hold up in higher CA courts. But I think usually they pay you out so that you don't challenge the contract. Through a bonus or other compensation. This is not about intellectual property, IBM is trying to stifle competition because this guy kicks a**.

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