Ex-IBM executive Mark Papermaster and Big Blue will face off again in U.S. District Court as tensions continue to heat up over Papermaster's acceptance of a position at Apple -- in what IBM charges is violation of his non-compete employment agreement.
This week's sparring will come on the heels of an injunction ordered by New York Federal District Judge Kenneth Karas last week that, for the time being, will keep Papermaster from his new job in Apple's (NASDAQ: AAPL) iPod/iPhone division.
This week, the parties will focus on the setting of a bond by IBM (NYSE: IBM), a procedure typical in the early stages of temporary injunction actions that's designed to ensure either party can be compensated if the injunction is later found unjust or improper. Papermaster may be entitled to seek financial compensation if it's determined that he was unjustly barred from his position at Apple.
If Papermaster does not agree to IBM's proposal, he must object in a court filing by tomorrow. The court has set Nov. 18 as a status conference date for potential trial and discovery action.
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Calls to IBM's attorneys and press relations and Papermaster's attorneys were not returned by press time.
IBM has claimed that Papermaster's deep knowledge of its microprocessor and semiconductor technology precludes him from working at Apple (NASDAQ: AAPL) for one year, according to the terms of a 2006 non-compete agreement he signed with Big Blue, where he served as vice president of microprocessor development.
Papermaster, a 26-year IBM employee, has disputed that claim. In his court filings, he called the Apple job a "once in a lifetime" opportunity that does not have anything to do with his work at IBM.
"Nothing about his new role will implicate any trade secrets of IBM," Papermaster stated in his court filings. "Apple and IBM are not even competitors; IBM's business is focused on large 'enterprise' applications for businesses, whereas Apple's is based on consumer electronics."
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Tech's H-1B Hiring Faces 'Employ America Act'According to court documents, Papermaster told IBM on Oct. 13 that he was leaving to take the role of senior vice president of devices hardware engineering at Apple, replacing Tony Fadell, who left the company for personal reasons earlier this year.
Papermaster also told the court he continued working at IBM for a week before meeting with IBM's human resources department on Oct. 20. In court papers, he stated he was presented with a counteroffer and was told the Apple job would be a breach of his non-compete agreement. He said IBM offered him one year's salary if he would "respect his contractual obligation to refrain from working for an IBM competitor for one year."
The next day, IBM filed its court request for injunction to stop Papermaster from joining Apple.
Even though IBM has all but exited the consumer business, the company claims Apple remains a direct competitor as both sell servers -- a fact Papermaster concedes in his legal documents.
"Indeed, Mr. Papermaster admits that IBM and Apple compete in the sale of 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," IBM stated in its court filings.
Yet Papermaster claims in his filings that the industries served by the two vendors -- that IBM serves large enterprises while Apple is focused on consumer electronics -- invalidates the non-compete claim.
But IBM claims the distinction is not justified as both big and small electronic devices require microprocessor technology on which both vendors rely.
"IBM's 'Power' architecture -- in which Mr. Papermaster was IBM's top expert ... -- is crucial to the design of semiconductors devices for servers and consumer electronics, including embedded microprocessors that are smaller in size and more energy-efficient," IBM said in its court filings. "Thus, Mr. Papermaster's argument that there is no risk that he will ever utilize or disclose IBM's trade secrets is not credible."






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