Former IBM Exec Ordered To Stop Working For Apple

tom_guyette writes "ComputerWorld reports a federal judge has ordered former IBM executive Mark Papermaster, recently hired as Apple's vice president of hardware devices engineering, to stop working for Apple. The judge's ruling is based on a motion for preliminary injunction made by IBM, which states Papermaster's new job violates a non-compete agreement he signed in 2006. In response, Papermaster asserted to the court that 'Nothing about his new job will implicate any trade secrets from IBM.'"

Comments

states rights!

[mactard]

I could've sworn that non-competes were illegal in California. States rights need to be preserved!

Re:states rights!

[Actually, I do RTFA]

I could've sworn that non-competes were illegal in California

I could've sworn IBM was in New York.

The US Constitution explictly states one state cannot discharge your contractual obligations made legally in another state.

Re:states rights!

[spire3661]

So what, the guy cant work in his professional field anymore? I get that you want to protect your IP, but not at the cost of a very highly qualified individual's livelyhood. If Nvidia makes an infringeing part, you sue them, but you dont stop people from taking jobs. Chilling effect indeed! I have friends that would think twice about working for Big Blue now. Makes me nervous of the thought of signing your brain over to a corporation.

Re:states rights!

[tylersoze]

I could've sworn the matter hasn't actually been decided by a court. From wikipedia:

"The preeminent court decision discussing the conflict between California law and the laws of other states is Application Group, Inc. v. Hunter Group, Inc., 61 Cal.App.4th 881 (1998). In Hunter, a Maryland company required that its Maryland based employee agree to a one-year non-compete agreement. The contract stated that it was governed by and to be construed according to Maryland law. A Maryland employee then left to work for a competitor in California. When the new California employer sued in California state court to invalidate the covenant not to compete, the California court agreed and ruled that the non-compete provision was invalid and not enforceable in California. Business and Professions Code Section 16600 reflects a "strong public policy of the State of California" and the state has a strong interest in applying its law and protecting its businesses so that they can hire the employees of their choosing. California law is thus applicable to non-California employees seeking employment in California.

Whether California courts are required by the full faith and credit clause of the United States Constitution to enforce equitable judgments from courts of other states, having personal jurisdiction over the defendant, that enjoin competition or are contrary to important public interests in California is an issue that has not yet been decided."

Re:states rights!

[Maudib]

Either way it doesn't matter. This was a federal court, not state.

Re:states rights!

[kae77]

This is standard corporate procedure. You work with a company, they reveal trade secrets, you sign a clause saying that you won't work in the same industry or with a direct competitor for a year. This guy was treated more than fairly. They didn't kick him to the curb, they offered him a years paid salary to sit out, and he still left the company. When you take into consideration that Apple recently dumped IBM's processors, and some lingering animosity from that, it's no wonder why IBM is being aggressive in it's approach. While I'm no fan of corporate overlords, you don't just let some high level shirt walk off with all of the trade information about your current and future plans to a competitor and sit idly by. This guy knew exactly what he was doing and decided to roll the dice.

Is this Dilbert or Slashdot?

[Sponge Bath]

An executive named Papermaster?

Time to get rehired

[sleeponthemic]

As "food and beverage technician".

Lame response

[Anonymous Coward]

He signed the non-compete. *HE* gave away his freedom. Not the State.

The State is just going to hold him to HIS word.

Re:Lame response

[plasmacutter]

He signed the non-compete. *HE* gave away his freedom. Not the State.

The State is just going to hold him to HIS word.

non-competes represent collusion within various industries in a conspiracy to remove employees' civil liberties and subject them to increased risk of improper compensation.

"industry standard" = collusion, plain and simple.

Re:Lame response

[ScrewMaster]

But...but... but.. What about my freedom to tell people lies and break my word?!

You always have that freedom. You just aren't guaranteed to always get away with it.

Re:Lame response

[bennomatic]

Your post is silly. Companies require these non-comp agreements even where they are not enforceable so that they can bully their employees when they leave, if they leave for a competitive company. Without unionizing everything, few individuals will have the leverage to simply walk away from every company that requires a non-comp, and if they ever have to fight, it'll be expensive even if the law is on their side.

So in this case, who is lying? The person who signs an unenforceable document because it's a formality which is required in order to get hired, or the company which requires it and can only use it for intimidation because they know if their employee had the resources to fight it, they would lose?

Couple of things I've learned recently: Lawyers, apparently, never sign these things, but they're kind of special because a good lawyer can just hang out their shingle. Also, in the UK, it's common practice in the financial industry for the hiring company to pay a year's salary or more for someone they are poaching from a competitor to take a nice vacation, so they can come back outside of their non-comp boundaries.

The latter (UK financial) happened to a cousin of mine. The former I learned from my wife, who recently left the DOJ and was heavily courted by an HR consulting company. They practically begged for her to join, but they could not guarantee a minimum amount of consulting work, and also required a non-comp. Her reaction? "I believe slavery is still illegal in the US." No go.

Re:Lame response

[bennomatic]

If it's that big of a deal to you then don't sign it. I've known several programmers that confronted management about the non-compete and didn't have to sign. However, non-competes make a ton of sense FOR THE EMPLOYER, at least the narrower ones which specify that you can't go to a company in direct competition with your current one. For tech jobs, knowledge is everything, and knowledge doesn't just disappear overnight. If a senior programmer where I currently work were to jump to a competitor, it would be worth millions of dollars if they could pick his brain about techniques, abilities, and which customers were dissatisfied.

There, fixed that for you. If the employee is worth that much, employers should treat them well, compensate them appropriately and make them feel appreciated. There are already laws about trade secrets; a non-compete agreement is just a control mechanism which, when enforceable, gives great leverage to the employer and none to the employee.

Re:Lame response

[KiahZero]

Lawyers don't sign non-competes because they're barred by ABA Model Rule 5.6(a).

Not that I just finished taking the MPRE or anything.

Re:Lame response

[node 3]

Not if they want to work for me. If you don't like non-competes, don't work somewhere that requires you to sign one. Capitalism is about making trade-offs.

Capitalism is about competition. Non-compete clauses are the very opposite of competition. If you don't want your employees to work elsewhere, maybe you should pay them more? Or suck it up and accept that you're going to have to compete against him at some point in the future.

You have no right, no right, over the lives of your employees. That's another thing about Capitalism--it's supposed to be about freedom.

What kind of an idiot...

[Anonymous Coward]

...starts litigation against a guy named Papermaster?

NY law applies

[UnknowingFool]

According to the non-compete agreement, NY law applies because IBM is based in NY. However Papermaster worked out of their Austin, TX offices where non-competes are not enforceable. One thing I think that Apple would argue is whether Papermaster is competing at all in his current job. Most non-competes only cover areas of work that are in direct competition. A former GE Energy executive taking a job at Exxon may have an issue. A GE Plastics executive may not have any issues. Right now I've heard two versions of the work Apple hired him. One version says the Papermaster will work as head of their iPod/iPhone line (which does not compete directly with IBM's blade server or chip technology). Another version has him head of the new chip design for iPod/iPhones which is more direct competition.

I may not fully understand non-competes...

[NoobixCube]

A non-compete seems to me the perfect way to pay your best employees peanuts. If you sign a non-compete, then you're basically trapped at one company, and can never get a job in the same industry again. Using that information, your employer could pay you as little as they want and never fear you leaving for another company.

Re:I may not fully understand non-competes...

[digitalchinky]

Some really do last a lifetime, I have a non-compete agreement in my secret 3 letter agency clause that says: "We, as in a bunch of guys with guns and the keys to all the jails and stuff, will come get you no matter where you are in the world if you don't keep your mouth shut about our government secrets until you die. If you work for someone else in the trade we might even hang you until you are dead, then put you in jail for 322 years just to make sure"

Sign the delta brief and you've signed on for life.

My choices were quite limited after resigning. People don't want to employ former spies. The best I could manage were a few low paying industrial espionage gigs. So I put ~disgruntled former spy~ in the resume and my troubles went away overnight.

California wants to make this difficult...

[cdrguru]

Sure it would be nice if such non-compete agreements could not be implemented. From what I have seen in the past it was unusual that an employer would get themselves into this situation in the first place - if a possible non-compete problem existed they just didn't bother with that applicant.

Once you start opening the door to such things, it is very difficult to just sue the company. What the non-complete may be relevent for may be something that is buried deep in the processes of the company and not at all apparent in the resulting product. And besides, that just opens the door to exploratory lawsuits because the person that got hired might be disclosing information they have no right to disclose.

This isn't just "personal knowledge" either. It is often "organization knowledge" that you have to know about in order to do your job at Company A. Upon going to Company B it is clear that if they only knew what your former employer did, they would get more sales, make products faster and cheaper, whatever.

Where some co-workers got themselves into trouble was (a) not disclosing there was a non-complete agreement in the first place and (b) trying to find out how much this knowledge might be worth to their new employer. As in "I might be able to offer some advice on how to do this better for $5000." Yes, I heard about that offer once. It was a while ago and resulted in immediate (same hour) termination of the employee.

Compensation?

[JakiChan]

I think if a company wants to force someone not to work in their area of expertise for a year then they should be forced to compensate that person for a year. They should match Apple's compensation and benefits and the guy doesn't have to work. That seems fair.

Re:Compensation?

[Trojan35]

FTFA:

In September, Apple again contacted Papermaster, which led to more meetings with Jobs and others in early October. After he declined a counteroffer from IBM and another, separate offer to "sit out" for a year in exchange for his current base salary, Papermaster told IBM he had made up his mind and was going to Apple.

bs

[EdelFactor19]

This is not a lowly employee for them to bully around. This is an executive vice president. Did you not read the article? These are the kind of people who could easily say "Strike that from my contract or no deal, and I'll work somewhere else"

I don't know him personally, and I'm sure he's a fine individual; but that said, I don't think he'll be in a pinch for money anytime soon. If this causes reform that affects normal people like you and me great. But otherwise I could careless, he should suffer the same fate we would. The difference is that if you or I left or get laid off a. we don't have a crazy pension that he likely does. b. we don't have companies happy to pay 6+ figures a year for us to do nothing.

The person is lying, no one forces you to sign anything. Employment is at will, if you don't like it negotiate it or don't sign it. That's how the legal system works. I can't sign a loan for a million dollars and then say you didnt really think I was going to pay you back did I?

Hopefully this will get the contracts and the laws regarding them updated and inspected. Much like the copyright issues with music, instead of breaking the laws and skirting them lets CHANGE them.

Re:bs

[bennomatic]

Handful of points:

• Once you're at that level, there are fewer positions available, and if there's collusion such that no companies hire without a NC agreement, then you are either forced to sign, or you're flipping burgers.
• Your loan example is apples to my oranges. A loan is a material exchange. A closer example would be if you made a loan to me at a rate that is outside of the bounds allowed by usury laws. I might sign it not knowing what the laws are, or because I'm desperate for the money, but if I learn that I'm being taken advantage of, I may well tell you I will not pay you more than the legal limit on interest over the principal, and I may sue you for punitive damages for the high payments you've required of me thus far.
• Sometimes unjust laws have to be challenged by breaking them. Without Rosa Parks, our next president might have spent hhttp://slashdot.org/comments.pl?sid=1024461&cid=25714231#is childhood sitting at the back of the bus.

Re:bs

[precogpunk]

"The person is lying, no one forces you to sign anything. Employment is at will, if you don't like it negotiate it or don't sign it."

From personal experience, the situation is often more complex than this. In my previous job the company was growing quickly and HR was not in place to cope. One year later a new head of HR reviewed everyone's file and required some employees to sign a new non-complete. At that point it would have been *very* hard for me to go back to freelancing and build up my old client base. I was also in management so refusing would have been awkward to say the least.

Two years go by and I was taking a job at another company working for one of my previous employer's clients. In my city about 50% of companies in the industry work for this client. I didn't maintain any key relationships nor was I stealing any secrets but I got slapped with the non-complete. Lucky for me, the new employer stuck their best lawyers on it to review the merits of the case and sided with me.

It's very hard to get out of signing a non-complete, or altering it, unless you have a strong position of negotiation (read: they need you more than you need them). Imagine you've accepted a job, told your employer, and then you learn you need to sign one. Imaging you have a job and are asked to after a period of employment. Imagine you're trying to break into the industry, or got laid off, and this is your first job offer in four months.

It's not so cut and dry-- I wish our government would do more to protect Joe the Developer's rights to "live liberty and the pursuit of happiness". I also take offense that you think someone who's a EVP, or pulls six figures, could be significantly hurt monetarily but this. Do you know for a fact that Apple is paying his legal bills? It's the individual getting sued in most cases and the result could seriously devastate his professional career.