Update: judge orders Apple's new mobile head to stop work

[AppleInsider]

Apple's plans for its new recruit from IBM, Mark Papermaster, have been dealt an at least temporary setback as a federal judge has ordered him to halt any work at his new employer.

US Federal District Judge Kenneth Karas late on Friday ordered the new executive to "immediately cease" work with Apple until the court had come to a decision on whether his employment there breaches the non-compete clause in his contract with IBM that prompted a lawsuit.

The ruling sets back Apple's plans to have Papermaster replace long-serving senior official Tony Fadell, who is leaving the elevated position at the consumer electronics maker for personal reasons.

Apple and Papermaster's lawyers have already mounted a defense in the legal filings meant to avert trouble for the candidate, arguing that his top spot in the division handling the iPhone and iPod touch carries too narrow a scope to risk trade secrets leaking out.

Lawyers for Papermaster also claim that requiring him to obey the non-compete clause, regardless of its particular relevance, would be "incredibly damaging" to his career as it would keep him out of touch with the industry.

IBM disagrees and contends that the nature of processors, regardless of whether they belong in the servers Papermaster would have dealt with or the ARM chips that Papermaster may see, makes it too dangerous to allow one of its senior staffers to switch hands.

"Electronic devices large and small are powered by the same type of intelligence, the microprocessor," the New York state-based company insists.

[ View this article at AppleInsider.com ]

[parky]

IBM you should be ashamed of yourself.

If you can't succeed in business without being bitter and twisted then you don't deserve to.

[webfrasse]

..peoples heads. Way to go IBM...

Originally Posted by parky

IBM you should be ashamed of yourself.

If you can't succeed in business without being bitter and twisted then you don't deserve to.

[markb]

"Electronic devices large and small are powered by the same type of intelligence, the microprocessor," the New York state-based company insists.

This argument is lame. They might as well have said..."People at Apple breathe oxygen. We too breathe oxygen, therefore he cant go work there as they compete with us in the whole breathing area". IBM and Apple are in no way competitors and havent been since IBM sold off their notebook business. Heck, this guy was going into the consumer device sector, even further removed from IBMs realm. Hope justice is done on appeal.

[trevorlsciact]

why is it that contracts like this are legal?! this is just one step away from indentured servitude

[Shookster]

I wonder what proportion of this lawsuit is driven by sour grapes over Apple's decision to drop PPC... it must be playing a part.

[monstrosity]

Originally Posted by Shookster

I wonder what proportion of this lawsuit is driven by sour grapes over Apple's decision to drop PPC... it must be playing a part.

IBM only had themselves to blame for that one.

This is a shame for Apple, though I can understand IBM's point of view as I once trained someone up who immediately went into competition against me the moment he became useful. Waste of time, waste of money, and shot in the foot.
Not really a comparable story I know, but thought I would share my perpetual annoyance with you anyway.

[Rot'nApple]

Originally Posted by AppleInsider

a federal judge has ordered him to halt any work at his new employer.

Do I still get paid - -

[Erunno]

Originally Posted by Shookster

I wonder what proportion of this lawsuit is driven by sour grapes over Apple's decision to drop PPC... it must be playing a part.

AFAIK IBM more or less dropped Apple as they focused most of their development on the processors which would power the then upcoming new consoles (PS3, WII, XBOX360) and less and what they perceived the needs of a smaller customer (especially competitive notebooks CPUs). Actually, I can't blame them for that decision. They are probably making tons of money with the sales from the console CPUs. Plus, inventions like the Cell processor can be used in other devices as well so I doubt that the upper IBM management is suffering from sleep disorder having lost Apple as an customer.

[JeffDM]

Originally Posted by trevorlsciact

why is it that contracts like this are legal?! this is just one step away from indentured servitude

In some states, non-competes aren't legal. I've heard that California law prohibits them. In NY or federal courts, that's probably a different story.

I understand what you mean, but the problem is that over the period of employment, there are certain trade secrets learned by an employee that could be transferred to another company simply by the other company hiring them and having them do similar work. That time delay in part reduces the chance of predatory hiring that could induce a brain drain and transfer of valuable knowledge from the company that developed it to other companies that want to just take it. The time delay also allows time for the secrets to grow obsolete, a year can be a lot of time.

[Marvin]

Originally Posted by Rot'nApple

Do I still get paid - -

You would think that if an employer could enforce a non-compete, they would be required to compensate for it. Unless they already did of course by adding an extra year's salary onto Papermaster's pay up until termination.

[Addison]

I don't know why Apple doesn't just buy IBM, it would give them such an "in" to the corporate world.

[FormerLurker]

Originally Posted by JeffDM

In some states, NDAs aren't legal. I've heard that California law prohibits them. In NY or federal courts, that's probably a different story.

I understand what you mean, but the problem is that over the period of employment, there are certain trade secrets learned by an employee that could be transferred to another company simply by the other company hiring them and having them do similar work. That time delay in part reduces the chance of predatory hiring that could induce a brain drain and transfer of valuable knowledge from the company that developed it to other companies that want to just take it. The time delay also allows time for the secrets to grow obsolete, a year can be a lot of time.

Non-Disclosure and Non-Compete are two different things. This lawsuit is based on a non-compete, not an NDA.

NDAs are actually easier to enforce, as they are more specific. Non-competes are much more difficult, as they basically say, "if you leave us, you'll have to find a completely different industry to work in".

[Dueces]

I don't understand why people feel like he shouldn't be held to his non-compete agreement. This man had a choice whether to enter into this contract or not to. He chose to, and he should be held to that contract.

Somehow I doubt all you hypocrites would be bashing Apple if the head of the iphone department went to another electronic manufacturer and Apple was in IBM's position.

This is a highly educated man who signed into an agreement he was fully aware of and understood completely, not some middle school dropout in the hood being fleeced by a fast talking salesman.

[parky]

Originally Posted by Dueces

I don't understand why people feel like he shouldn't be held to his non-compete agreement. This man had a choice whether to enter into this contract or not to. He chose to, and he should be held to that contract.

Somehow I doubt all you hypocrites would be bashing Apple if the head of the iphone department went to another electronic manufacturer and Apple was in IBM's position.

This is a highly educated man who signed into an agreement he was fully aware of and understood completely, not some middle school dropout in the hood being fleeced by a fast talking salesman.

Just like all the people who signed iPhone agreements and then have nothing but complain about them. Just because he signed it does not make it legal.

How many people do IBM recruit from the competition, they don't seem to mind then.
It is the way business works and free movement of people should be supported not blocked.

[elroth]

If Apple would just let Papermaster keep working at IBM, there soon may be a Powerbook G5. They've almost got it.

[Inverse137]

the U.S. Constitution GUARANTEES a person the right to make a living. That supersedes any non-compete document.

unless IBM wants to pay this guy to sit home and watch Judge Judy they better quit wasting everyone's time.

This judge should know better.

[Inverse137]

Originally Posted by Dueces

I don't understand why people feel like he shouldn't be held to his non-compete agreement. This man had a choice whether to enter into this contract or not to. He chose to, and he should be held to that contract.

Somehow I doubt all you hypocrites would be bashing Apple if the head of the iphone department went to another electronic manufacturer and Apple was in IBM's position.

This is a highly educated man who signed into an agreement he was fully aware of and understood completely, not some middle school dropout in the hood being fleeced by a fast talking salesman.

Dueces, because idiot lawyers told the buisness' owners that non-compete contracts were enforceable. Most people sign them with a wink-wink-nod-nod reluctance. Most states don't recognize them because the consequence of recognizing a non-compete clause is to deprive a person of the right to make a living. That FUNDAMENTAL right is guaranteed to you by the U.S. Constitution.

Although, by your post, I'm guessing you are a fan of George Jr. and see the Constitution more as a guideline that can be ignored when it suits your needs.

The only legal leg IBM has is defending the patents it holds if they were ever infringed upon. They have no prayer of keeping this dude from working.

[Superbass]

Well, I'm sure if IBM or MS poached some higher-ups at Apple with big money, you'd be crying bloody murder and laughing at IBM or MS when the court injunction happened.

[bwik]

This is funny because again, Apple is selectively trying to distort the legal system for corporate gain (as is IBM). On the one hand Apple is being a stickler about implied powers of their customer license agreements for their OS, in reference to Psystar. A reach to be sure. On the other hand, they pretend non-compete agreements don't mean dick! Each is a case of "do what we want, and let the lawyer fix it." And by the way I support Apple. But they should be more careful and logical about what they expect from the courtrooms.

[Ronbo]

Originally Posted by Dueces

I don't understand why people feel like he shouldn't be held to his non-compete agreement. This man had a choice whether to enter into this contract or not to. He chose to, and he should be held to that contract.

Somehow I doubt all you hypocrites would be bashing Apple if the head of the iphone department went to another electronic manufacturer and Apple was in IBM's position.

This is a highly educated man who signed into an agreement he was fully aware of and understood completely, not some middle school dropout in the hood being fleeced by a fast talking salesman.

Personally, I think the biggest problem with what IBM is doing isn't that it's illegal or immoral or whatever (it is what it is, a matter of a contract that party A offered to party B, which party A is trying to hold B to, and which party B is saying doesn't apply). I just find myself wondering about the negative impact this will have on people thinking of joining IBM. I wonder if everybody gets a contract like this, or if it's something given just to people when they reach a certain level of authority.

[bwik]

Originally Posted by Inverse137

Most states don't recognize them because the consequence of recognizing a non-compete clause is to deprive a person of the right to make a living. That FUNDAMENTAL right is guaranteed to you by the U.S. Constitution.

There are lots of odd things you can sign away -- sexual favors, your fingernail dirt, your telepathic goodwill -- if you sign a contract. Breach of contract is usually actionable. If you don't want to give up your rights, don't. But if you do sign things away, competent adults sometimes are bound by contracts.

[anilsudhakaran]

IBM = Idiots Become Managers

I thought slavery was abolished long time ago, in the United States. Looks like it is still alive at IBM.

[Adjei]

Originally Posted by Addison

I don't know why Apple doesn't just buy IBM, it would give them such an "in" to the corporate world.

IBM is worth more than Apple, where would they get the money?

[Adjei]

Originally Posted by genericposts

I only agree with his hypocrisy statement. If this were the other way around the zealots, Appleistas and the like would be up in arms screaming to high heaven that the evil doer should be punished. Stone him. Off with his head. Screw him back to the Stone Age Steve. Hypocrites most of you.

Here comes the dude who hates all things Apple.

[mdriftmeyer]

These no-compete contracts are a reaction to a sad reality in Technology Industries.

I've seen countless times where a guy/gal comes in, gets trained, ramps up their skills, learns the companies IP and bails to a start up for more money and miraculously produces a near duplicate product/service.

It's not rocket science the reason for corporations to have turn Training and investment of their staffs over to Consulting Firms who sign highly protective contracts to do the work that in-house staff should be doing.

[JeffDM]

Originally Posted by FormerLurker

Non-Disclosure and Non-Compete are two different things. This lawsuit is based on a non-compete, not an NDA.

NDAs are actually easier to enforce, as they are more specific. Non-competes are much more difficult, as they basically say, "if you leave us, you'll have to find a completely different industry to work in".

Sorry, I wrote NDA when I meant non-compete. I do know the difference, just wrote the wrong term.

Originally Posted by Dueces

I don't understand why people feel like he shouldn't be held to his non-compete agreement. This man had a choice whether to enter into this contract or not to. He chose to, and he should be held to that contract.

Somehow I doubt all you hypocrites would be bashing Apple if the head of the iphone department went to another electronic manufacturer and Apple was in IBM's position.

This is a highly educated man who signed into an agreement he was fully aware of and understood completely, not some middle school dropout in the hood being fleeced by a fast talking salesman.

I think this is a specious argument, and calling people that might disagree with you hypocrites isn't going to gain you anything. One problem is that you are lumping Apple fans into one homogeneous group, and it doesn't really work that way, so it ends up being a grand strawman argument.

Non-competes do look like a step towards signing oneself to indentured servitude, and that's why there is a distaste to the practice. The reason why non-competes are undesirable is that in order to continue the career, well, you can't without letting your skills fall rusty before moving to a different company, so that's it for the career. And it has a faint smell of letting people sign themselves away to slavery, and there is a degree of that in there. Under some lines of thought there's only so much of one's freedoms that a person should be allowed to sign away. I'm not saying there aren't valid reasons for the practice, there are, but there are also valid reasons against the practice as well.

[palegolas]

It's called "career". Maybe IBM has never heard about it?

[ascii]

I think ordering someone not to work is criminal. What if it's his joy in life? If I was him and I would keep working but just do it on the down low.

[aplnub]

Originally Posted by trevorlsciact

why is it that contracts like this are legal?! this is just one step away from indentured servitude

I doubt anyone held a gun to Papermaster's head when he signed the contract. So the better question is, why do people sign these things? Obviously to work. It was a gamble for him to leave and he knew it or else they would not have prepared.

It's a coin toss...

[ouragan]

Lawyers for Papermaster also claim that requiring him to obey the non-compete clause, regardless of its particular relevance, would be "incredibly damaging" to his career as it would keep him out of touch with the industry.

IBM disagrees and contends that the nature of processors, regardless of whether they belong in the servers Papermaster would have dealt with or the ARM chips that Papermaster may see, makes it too dangerous to allow one of its senior staffers to switch hands.

Apple would have you believe that breaking a non-competition agreement does not carry any consequence whatsoever. If the law was like that, why would anyone enter into such an agreement and pay good money for it?

The non-competition agreement is valid for one year only and was signed in return for the salary, bonus, stock options, health insurance, pension, severance payment equal to one year of salary, and other valid considerations paid by IBM to its employee.

Exclusive jurisdiction is given to the Court of the County of Westchester, State of New York. The law of California and the Courts of California have no jurisdiction over this matter.

The non-competition agreement is standard and reasonable because its duration is limited to one year and the employee is paid a salary or other compensation by IBM for the whole duration of the period of non-competition.

The intertlocutory injunction will stand.

[Rot'nApple]

Originally Posted by elroth

If Apple would just let Papermaster keep working at IBM, there soon may be a Powerbook G5. They've almost got it.

And at speeds of 3GHz no less!

[Mazda 3s]

Originally Posted by ouragan

Apple would have you believe that breaking a non-competition agreement does not carry any consequence whatsoever. If the law was like that, why would anyone enter into such an agreement and pay good money for it?

The non-competition agreement is valid for one year only and was signed in return for the salary, bonus, stock options, health insurance, pension, severance payment equal to one year of salary, and other valid considerations paid by IBM to its employee.

Exclusive jurisdiction is given to the Court of the County of Westchester, State of New York. The law of California and the Courts of California have no jurisdiction over this matter.

The non-competition agreement is standard and reasonable because its duration is limited to one year and the employee is paid a salary or other compensation by IBM for the whole duration of the period of non-competition.

The intertlocutory injunction will stand.

At least someone in this thread knows what they are talking about

[Brendon]

Originally Posted by AppleInsider

Apple's plans for its new recruit from IBM, Mark Papermaster, have been dealt an at least temporary setback as a federal judge has ordered him to halt any work at his new employer.

Bla, bla, bla...

Take it easy folks this is to be expected, this a halt order, not a ruling. Two totally different things. This is only the court saying that Papermaster cannot work while the court is deciding if by doing so he is violating his contract with IBM. This is normal and expected, and is no sign or indication of the final ruling. So for now he can cool his heels, hang out, decide how he wants his office decorated, all of the things that would normally happen when switching jobs can happen now. The court just helped Papermaster clear his calendar. A ruling may take a few weeks at the most, so no big deal, it only plays into the hands of Papermaster. And yes he gets paid, the court only said he cannot work in the questioned capacity, and so he can still decide what colors the office could be, and the like and Apple is still free and clear to pay him.

[zinfella]

Originally Posted by ouragan

Apple would have you believe that breaking a non-competition agreement does not carry any consequence whatsoever. If the law was like that, why would anyone enter into such an agreement and pay good money for it?

The non-competition agreement is valid for one year only and was signed in return for the salary, bonus, stock options, health insurance, pension, severance payment equal to one year of salary, and other valid considerations paid by IBM to its employee.

Exclusive jurisdiction is given to the Court of the County of Westchester, State of New York. The law of California and the Courts of California have no jurisdiction over this matter.

The non-competition agreement is standard and reasonable because its duration is limited to one year and the employee is paid a salary or other compensation by IBM for the whole duration of the period of non-competition.

The intertlocutory injunction will stand.

Some non-competes are of a longer duration. When Lucky Stores in Arizona were sold to ABCO, there was a 5 year non-compete clause in place for Lucky not to compete in Arizona.

[TheMadMilkman]

Originally Posted by ouragan

Apple would have you believe that breaking a non-competition agreement does not carry any consequence whatsoever. If the law was like that, why would anyone enter into such an agreement and pay good money for it?

The non-competition agreement is valid for one year only and was signed in return for the salary, bonus, stock options, health insurance, pension, severance payment equal to one year of salary, and other valid considerations paid by IBM to its employee.

Exclusive jurisdiction is given to the Court of the County of Westchester, State of New York. The law of California and the Courts of California have no jurisdiction over this matter.

The non-competition agreement is standard and reasonable because its duration is limited to one year and the employee is paid a salary or other compensation by IBM for the whole duration of the period of non-competition.

The intertlocutory injunction will stand.

You act like it's already been determined that his work at Apple violates the non-compete agreement. I'd like to know how you can be so sure on an issue of fact like that before the trial occurs.

[Johnny Mozzarella]

Originally Posted by ouragan

Apple would have you believe that breaking a non-competition agreement does not carry any consequence whatsoever. If the law was like that, why would anyone enter into such an agreement and pay good money for it?

The non-competition agreement is valid for one year only and was signed in return for the salary, bonus, stock options, health insurance, pension, severance payment equal to one year of salary, and other valid considerations paid by IBM to its employee.

Exclusive jurisdiction is given to the Court of the County of Westchester, State of New York. The law of California and the Courts of California have no jurisdiction over this matter.

The non-competition agreement is standard and reasonable because its duration is limited to one year and the employee is paid a salary or other compensation by IBM for the whole duration of the period of non-competition.

The intertlocutory injunction will stand.

We are also not getting the full story from Apple in another regard. Steve Jobs admitted in an interview that the PA Semi acquisition was based on the desire to build custom processors for the iPod and iPhone. Papermaster's hiring makes sense in the context that he will be overseeing iPod/iPhone hardware design and more specifically microprocessor design.

Despite the claims that IBM is not in the consumer electronics space, it's processors are in the PS3, Xbox and Wii.

[wheelhot]

Boo to IBM, if Papermaster did breach the contract then sue him, else don't. Besides, the current iPod and iTouch doesn't use PPC architecture, why is IBM so worried, it will take Apple a couple of years to develop its own processor and architecture for iPod and iTouch.

[synp]

Originally Posted by ouragan

Apple would have you believe that breaking a non-competition agreement does not carry any consequence whatsoever. If the law was like that, why would anyone enter into such an agreement and pay good money for it?

That's not what Apple is claiming. I'm sure his new contract has a similar clause. They are claiming that in his new position, he is not competing with IBM, so he's not violating the clause. If non-competes said that you couldn't work anywhere in the technology sector for a year, I think more courts would rule them non-enforceable.

The non-competition agreement is valid for one year only and was signed in return for the salary, bonus, stock options, health insurance, pension, severance payment equal to one year of salary, and other valid considerations paid by IBM to its employee.

A claim could be made that all jobs at this level carry with them a non-compete clause, so unless he wanted to get a low-level job, he really had to sign the non-compete and didn't have a choice. I'm sure a lawyer can make this claim, but I don't think it will stand.

Exclusive jurisdiction is given to the Court of the County of Westchester, State of New York. The law of California and the Courts of California have no jurisdiction over this matter.

The non-competition agreement is standard and reasonable because its duration is limited to one year and the employee is paid a salary or other compensation by IBM for the whole duration of the period of non-competition.

I think he's not paid specifically for that year. The idea is that IBM had to pay him more (in his regular salary) for him to agree to sign a contract that has this clause. Either way, that is why such a contract is usually accepted.

When companies tried to enforce such a clause on all levels or R&D, or to make it cover a too broad definition of "compete", such agreements were thrown out by the courts.

The intertlocutory injunction will stand.

I believe that is correct.

[synp]

Originally Posted by zinfella

Some non-competes are of a longer duration. When Lucky Stores in Arizona were sold to ABCO, there was a 5 year non-compete clause in place for Lucky not to compete in Arizona.

Sure, but that is different. Corporations may sign away many more "rights" than individuals can. A corporation might even be able to promise non-competition forever.