Papermaster Fires Back in IBM/Apple Tussle

The court battle between a former IBM executive over his move to Apple is heating up now that the ex IBM-er has countersued Big Blue in their trade secrets dispute.

Mark Papermaster’s suit, filed late last week, claims that IBM’s legal action to stop him from working at Apple (NASDAQ: AAPL) is unjustified. The suit says the non-compete agreement that he signed with IBM, which IBM is using to keep him from going to Apple, is too broad. He claims that the two tech titans are not direct competitors.

The lawsuit comes after IBM won an injunction keeping Papermaster from joining Apple. However, the federal court overseeing the case ordered IBM (NYSE: IBM) to post a $3 million bond in the matter. The bond would address potential compensation that Papermaster might be entitled to if the court’s injunction preventing Papermaster from joining Apple is determined unjust.

The two parties are scheduled to appear tomorrow before New York Federal District Judge Kenneth Karas for a discovery and pre-trial conference.

In his countersuit, Papermaster claims Apple and IBM are not significant competitors, and that his IBM role as vice president of blade development should not preclude him from heading up Apple’s product development for the iPod and iPhone.

“IBM primarily provides business enterprise services, while Apple’s primary business is the design, manufacturing and marketing of consumer electronic products,” states Papermaster’s counter action.

“The “Business Enterprise” restriction [in the noncompete] is unreasonably broad in that it purports to restrict Mr. Papermaster from going to work for any company that engages in competition with his former business unit to any extent, even if Mr. Papermaster will not be working for the part of the company that does so,” according to the legal filing.

IBM filed suit on October 22 to prevent Papermaster from joining Apple.

In its suit, IBM claims Papermaster’s deep knowledge of its microprocessor and semiconductor technology precludes him from working at Apple for one year, according to the terms of the 2006 non-compete agreement that he signed with IBM.

On November 7 Karas issued an injunction to stop Papermaster from taking the Apple job.

Lawyers for both IBM and Papermaster have told they will not comment on their court actions during the legal process.

In his countersuit filed November 13 Papermaster claims the noncompete agreement imposes an unreasonable time limitation and geographic restriction as it stipulates he can’t work for any competitor in the world for one year.

“In the world of technology, any trade secrets that Mr. Papermaster possesses would lose their value prior to the expiration of a year,” according to the countersuit. “Mr. Papermaster has honored and intends to continue to honor his agreement not to disclose any confidential IBM information.”

Papermaster’s legal action requests that the noncompete agreement be determined “unreasonably overbroad and unenforceable” and that he be compensated by IBM for legal expenses.

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