updated 11:05 pm EST, Tue November 11, 2008
IBM vs Papermaster update
The legal battle between IBM and its former executive Mark Papermaster has heated up as the two parties prepare for action next week, according to InternetNews. Because an injunction has prevented Papermaster from starting his new job at Apple, the two sides will negotiate a bond that will allow monetary compensation to be sought if the injunction is found to be unjust. If the court determines that Papermaster should not have been blocked from his career move, IBM could end up paying for the blunder.
The dispute surrounds Papermaster's acceptance of a position at Apple, replacing Tony Fadell as the Senior VP of Devices Hardware Engineering. A non-compete agreement clause in his IBM employment contract, however, prohibited him from switching to a competitor for a full year after leaving the company.
IBM quickly took its ex-VP of microprocessor development to court after he declined a counteroffer from its HR department. The offer would have paid him a year's salary if he would at least "respect his contractual obligation to refrain from working for an IBM competitor for one year."
Papermaster defends his action with claims that the companies are not in competition with each other, as Apple produces consumer goods while IBM focuses on enterprise products. He referred to the Apple offer as a "once in a lifetime" opportunity, and said that "nothing about this new role will implicate any trade secrets of IBM."
IBM takes a different stance on the matter, and pointed out that even Papermaster acknowledged that both companies manufacture servers. "Because IBM has shown that the Noncompetition Agreement is reasonable in duration and geographical scope, the admitted existence of competition -- and Mr. Papermaster's contractual admission that a violation of his agreement would cause IBM irreparable injury should be the end of the matter," the injunction documents claimed.
IBM goes further than the server example, claiming that its embedded microprocessor technology could easily be used in other consumer electronics as well. The company could be afraid that Papermaster will use the trade-secret chip technology for the next generation of iPods, iPhones, Mac computers, or Apple servers.
Papermaster has until November 11th to object to IBM's bond proposal, otherwise the parties will meet again next week. The conference could determine further actions or trial dates.