International Business Machines Corp. v. Papermaster
IBM v. Papermaster | |
---|---|
Court | United States District Court for the Southern District of New York |
Full case name | International Business Machines Corporation v. Mark D. Papermaster |
Decided | November 21, 2008 |
Docket nos. | 7:08-cv-09078 |
Citation(s) | 2008 U.S. Dist. LEXIS 95516 |
Court membership | |
Judge(s) sitting | Kenneth M. Karas |
Case opinions | |
Motion for preliminary injunctive relief granted | |
Keywords | |
non-compete clause, trade secret |
In 2008,
Case
Background and hiring
In October 2007, Apple started looking for a top-level executive to work under their Senior VP, iPod Division and eventually move into the Senior VP role, reporting directly to then CEO Steve Jobs. Although it interviewed him, Apple did not find Mark Papermaster to be the right fit at the time.[1]
In April 2008, Apple bought
Restraining order
IBM did not learn until the first hearing that Papermaster had already started working for Apple, and immediately filed for a
Inevitable disclosure
IBM argued that the appointment would cause it
Enforceability of non-competition agreement
The court also considered whether or not the non-competition agreement itself was reasonable and therefore enforceable. Karas found that, given IBM's international business, the geographic scope was necessary and the time restriction of one year was reasonable. Additionally, because of the similarity of the position at Apple to his work at IBM, the agreement was needed to prevent incidental misappropriation of IBM trade secrets. Critics believe the opinion could have repercussions such as "expanding inevitable disclosure doctrine" to the detriment of anybody attempting to further their career in a particular field by moving to another company in the same industry.[4]
In considering whether or not the non-compete clause caused undue hardship to Papermaster, the Court weighed the agreement with IBM against the once-in-a-lifetime opportunity of the SVP position. Judge Karas concluded that, since intellectual property is IBM's most valued asset, the cost of trade secret disclosure to IBM outweighed the cost to Papermaster in delaying the opportunity.[1] The case was set to go to trial.
Settlement
On 27 January 2009 it was announced that Papermaster's lawsuit with IBM had been settled and that he'd take over Senior Vice President of Devices Hardware Engineering at Apple on 24 April 2009, replacing Tony Fadell, who stepped down some months earlier.[5] The settlement requires that Papermaster make two scheduled court certifications – the first having occurred in July 2009 and another in October 2009 – to testify that he will protect IBM trade secrets.[6] Apple and IBM reached a settlement,[7][8] where "Papermaster could only work for Apple after a six month unpaid vacation."[9]
See also
- Wallace v. International Business Machines Corp. et al.
References
- ^ a b c d e f g IBM v. Papermaster, No. 7:08-cv-09078, 2008 U.S. Dist. LEXIS 95516 (S.D.N.Y. Nov. 21, 2008).
- ^ Brown, Erica. Apple Buys Chip Designer, Forbes (April 23, 2008).
- ^ "IBM Forced to Pay $3 Million to Ex-Staffer (Papermaster-Apple Case)". Retrieved January 20, 2009.
According to Computerworld, the $3 million bond is designed to pay for any costs or damages that Papermaster might suffer, should it be proved that IBM wasn't entitled to an injunction.
- ^ Altieri, Peter and David Clark, A New Byte of the "Inevitable Disclosure" Apple, EBG Trade Secrets & Noncompete Blog (February 12, 2009).
- ^ "Mark Papermaster to Begin at Apple as Senior Vice President of Devices Hardware Engineering on April 24". Apple Inc.
- ^ Beyers, Tim (January 30, 2009). "Big Blue Is Watching You, Apple". The Motley Fool.
- ^ Helft, Miguel (August 7, 2010). "Executive Leaves Apple After iPhone Antenna Troubles - NYTimes.com". The New York Times. Retrieved August 7, 2010.
- ^ Yukari Iwatani Kane and Ian Sherr (August 9, 2010). "iPhone Executive Leaves - WSJ.com". The Wall Street Journal. Retrieved August 9, 2010.
- ^ James Bessen (October 17, 2014). "How Companies Kill Their Employees' Job Searches". The Atlantic. Retrieved November 28, 2018.