Papermaster countersues; IBM to put up $3M

Papermaster countersues; IBM to put up $3M

Summary: In keeping up with the latest developments of the IBM-Papermaster-Apple legal saga, now comes word via Information Week that Mark Papermaster, the veteran IBM executive trying to defect to Apple, has filed a countersuit against Big Blue, alleging that non-compete clause he signed with IBM is irrelevant because Apple and IBM aren't director competitors. In a nutshell, Papermaster doesn't think IBM has any reason to worry.

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TOPICS: IBM, Apple
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In keeping up with the latest developments of the IBM-Papermaster-Apple legal saga, now comes word via Information Week that Mark Papermaster, the veteran IBM executive trying to defect to Apple, has filed a countersuit against Big Blue, alleging that non-compete clause he signed with IBM is irrelevant because Apple and IBM aren't director competitors. In a nutshell, Papermaster doesn't think IBM has any reason to worry. From his lawsuit (PDF):

Mr. Papermaster has honored and intends to continue to honor his agreement not to disclose any confidential IBM information. Indeed, when Mr. Papermaster accepted the offer at Apple, he signed an Intellectual Property Agreement in which he agreed not to disclose or bring onto Apple property any “confidential, or proprietary, or secret information” of IBM.

And even if the two companies were closer competitors, Papermaster says the non-compete agreement is way too broad and the one-year time limitation is unreasonably long, especially in tech time - where a lot can happen in a year. (Click excerpt to enlarge)

Papermaster excerpt 1

Furthermore, even if the agreement really isn't too broad or the time limit isn't too long, the agreement only applies to work in New York state - Big Blue's home turf - and not in Texas, where Papermaster was doing his work for Big Blue, or in California, where Apple is located.

So, to be clear, there are three solid reasons right there why IBM is wrong to try to uphold that agreement and should let Papermaster start working on the iPod and iPhone for Apple ASAP - or so says Papermaster.

Previous coverage:

Could it be that the courts think Papermaster has some legitimate arguments. In related news, the courts have ordered IBM to cough up $3 milion for a bond (PDF)  to cover any costs or damages Papermaster might suffer if things go his way in the legal battle.

Papermaster excerpt 2

Topics: IBM, Apple

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  • Copied text from two images to make it readable for screen readers

    Beginning of Image 1 to Text:

    73. The noncompetition Agreement is also unreasonably broad in that it purports to impose an unreasonably lengthly time limitation. In the world of technology, any trade secrets that Mr. Papermaster possesses would lose their value prior to the expiration of a year. The purported geographic scope of the "Restricted Area" is similarly unreasonable. Mr. Papermaster has resided and worked in Austin, Texas for the past 17 years, yet the language of the Noncompetition Agreement purports to restrict him from working anywhere in the world based on the global scope of IBM's business. Again, these restrictions are not necessary to protect any legitimate interests of IBM.

    End of image 1 to text.

    Beginning of image 2 to text.

    ORDERED that a bond be filed by Plaintiff on or before November 14, 2008 at 5:00 PM, in the sum of $3,000,000, and that Defendent may recover from Plaitiff under said bond all costs and damages, if any, suffered by him in the event that Plaintiff does not succeed in the action.

    End of image 2 to text.
    Grayson Peddie
  • Papermaster is wrong and knows it, weak attempt

    to squirm out is the act of a guilty man.
    No_Ax_to_Grind
    • Guilty of what?

      Trying to further his career? Trying to work with a new company to develop better products?

      We are all a sum of our past experiences, so does that mean that technically any of our past companies can sue us for "sharing information"? I understand the valid reasoning behind the noncompete as I have had one with each firm I have worked for. But at what point do we draw the line between a person leaving to better their career VS. someone leaving to share trade secrets?
      tem.digital
  • IBM is wrong, and the court knows it.

    That's why they are demanding the 3 million dollar bond.

    Non-compete clauses are so one-sided and the language is so over-broad that they are unenforceable in many jurisdictions. Thus the court, seeing that in all likelihood the IBM attack will fail, has required surety in the form of a bond.

    Regards,
    Jon
    JonathonDoe
  • RE: Papermaster countersues; IBM to put up $3M

    I'm sure that Apple has more in mind for Mr Papermaster than IBM Intellectual property. But he brings IBM intellectual assets to Apple anyhow. Even if he created the asset, he did so while being paid by IBM, hence it's IBM's asset. Perhaps the best answer is to let IBM sue Apple and Papermaster if that knowledge shows up in any Apple products in the next 24 months. I don't feel sorry for Papermaster if IBM has to anty up $3M. He was compensated pretty well.
    eweingartner9
  • RE: Papermaster countersues

    Lots of smoke and mirrors. Papermaster would
    with any job, use his accumulated knowledge
    alongside new discoveries to make new
    products. A new product would have,
    somewhere within it, a blue tinge of past
    experience. But so what? The past from
    whatever direction affects the future. IBM got
    their up to the minute money's worth out of
    their employee. Now he wants to work for Apple
    in an up to the minute same situation. The past
    is on the shelf. The future is on the drawing
    board.
    trm1945
    • Don't sign something you don't mean

      If you don't plan on complying with a contract you're asked to sign, don't sign it. Even Apple concurs that Information is an asset. His defense is that Apple isn't an IBM competitor, not the validity of the Non-Compete agreement. And that's a thin argument at best.
      eweingartner9
      • There are two issues here

        First, the fundamental issue of the enforceability of such contracts in general. A contract that violates the law is inherently null and void, and automatically unenforceable. Some believe that these contracts are unconstitutional, and there is no question that they are illegal in California, but that is a matter of law.

        Second, is the question of this particular contract in this particular case, which is a matter of fact, not law.

        "His defense is that Apple isn't an IBM competitor, not the validity of the Non-Compete agreement."

        And he's right.

        IBM's core businesses are services, software, and big iron. They don't make consumer electronics, they don't make consumer computers, and they SOLD their entire notebook operation because they don't want to be in that business.

        Apple's core business is CONSUMER electronics and computers, particularly notebooks. The very products IBM has deliberately chosen to shun.

        "And that's a thin argument at best."

        Absolutely not.

        It's a huge argument.
        It's a big, thick, meaty, throbbing argument.
        It's the biggest argument on the block.

        If someone leaves GM to work for a moped company, are they competing? Gosh, they are both in the "transportation" industry so I guess they must be...
        bmerc
      • Easier said than done

        Let's say every place you want to work at has an unreasonable Non-Compete agreement (NCA). If you want to be employed, you have to sign one of them. Do you really have a choice? I hope this becomes a test case and starts the ball rolling to invalidate these overly broad contracts. Yes, I see reasons for having a NCA, but many cross the line where the NCA becomes more of a restraint to employees who want to leave the company and less about protecting IP and trade secrets.

        If the issue is about IBM's racetrack memory, it may be to IBM's advantage that Papermaster knows about it. Part of his job is to improve the iPod line and could possibly convince Apple to purchase large quantities of this memory from IBM and use his knowledge to properly utilize this new memory. In this scenario, both his past and present employers are winners.
        mystic100
  • RE: Papermaster countersues; IBM to put up $3M

    I guess that we will find out if "non compete agreements" are worth any more than profession sports contracts.
    Update victim
    • RE: Papermaster countersues; IBM to put up $3M

      SOL (is that disambiguous enough for you?)
      "non compete agreements" obviously are'nt worth a wooden nickel when dealing with artificially machined intelligence,or "computer literacy" i.e.electronically generated Data lists, as though they are actual intellectual properties of imperfect humans CNSs, but burners such as fmr. mediae Lord Conrad Black, Baron of Cross Harbour & Fla, (usa) would certainly have a strong if somewhat conditioned pecuniarily slanted view on this type of criminally psychobaffled insanity. If only Harvard had graduated neophilanthropist Bill Gaits instead of letting the baby IBM flash boomer boy drop out.
      Still, no point crying over spilt milk is there & PE big o will perhaps help sort IT all out with nooky/knuckellaire El Akemindenejad, - now there's another 04NOV08 $10.5 Billion e U$d expert eH/ sorry nyeH. In my humbled globular experientialized opinion.(^u^)
      inbread
  • What if

    What if IBM had terminated Papermaster? would they still have their panties in a bunch when he went to work for Apple??? Probably not.
    Merlin the Wiz
  • RE: Papermaster countersues; IBM to put up $3M

    What the hell happened on the 18th? Common its almost been a week. Who's covering this case? I want the courts opinion already!
    DHillsAbbott