A U.S. judge turned down a request from IBM to bar its former head of mergers and acquisitions from working at Dell over allegations that he would disclose trade secrets.
The ruling means the executive, David Johnson, will be able to continue to work as Dell’s (NASDAQ: DELL) senior vice president of corporate strategy while IBM (NYSE: IBM) proceeds with a lawsuit that claims he violated a non-compete agreement.
It often takes several years for such suits to work their way through the court system.
IBM spokesman Doug Shelton said his company intended to appeal Friday’s ruling.
M&A is a priority for both companies, which are looking to add technologies that will differentiate their products at a time when global technology spending is slumping. Dell has said it wants to increase sales of servers, storage equipment and expand its business to large corporations — key areas for IBM.
Johnson, a 27-year IBM veteran whose lawyer declined comment on Friday, has maintained that his 2005 non-compete document is invalid because it was not properly signed.
The battle has gotten increasingly bitter in recent days. In an amended complaint on Thursday, IBM said Johnson secretly misused company facilities, resources and personnel to help create a venture capital firm, JSJ Capital Management, to invest in technology companies.
“He misled his superiors about his activities, secretly undertaken on his own behalf, misrepresented the nature and scope of his planned activities at Dell,” said IBM’s complaint filed in U.S. federal court in White Plains, New York.
Johnson has said in a court filing that he did not have access to confidential information at IBM that would provide a competitive advantage to Dell.
Federal District Court Judge Stephen Robinson said in his ruling on Friday that IBM had yet to demonstrate what type of trade secrets Johnson might bring to Dell.
A Dell spokesman declined comment.
Johnson has said he left IBM because the company broke a promise to consider him for a senior position that it made when it asked him to turn down an offer from another firm in 2001.
He maintains that the non-compete agreement is invalid because he intentionally signed his name in “the wrong spot” on the document in a bid to win time to work out his differences with his superiors.
“I believed that IBM did not consider the non-compete agreement agreed upon or entered because IBM returned to me the one I had signed in the wrong spot unexecuted and asked me to sign a new form,” Johnson said in an affidavit.
In his order, Judge Robinson said Johnson’s argument appeared to have merit.
“Following its receipt of Mr. Johnson’s improperly executed agreement, IBM’s actions raise significant doubts as to whether it believed that Mr. Johnson had accepted its offer to enter into a non-competition agreement,” he said in the order.
The case is IBM vs. David Johnson, 09-cv-04826, U.S. States District Court, Southern District of New York.