IBM to keep tabs on Papermaster's new position at Apple

[AppleInsider]

As part of his settlement with IBM last week, Mark Papermaster will be required to sign and submit court-governed declarations every few months saying he hasn't divulged any of the company's trade secrets while performing his new duties at Apple.

In a five-page Southern District of New York court filing dated yesterday, and signed by attorneys for both parties, Papermaster agrees to check in with Big Blue whenever he's not sure whether he's about to tread on confidential information. *According to the document, the two sides reached the settlement last Friday.

Papermaster will also submit signed declarations, one in July and another in October, confirming he has not disclosed any of IBM's secrets nor does he intend to, under penalty of perjury. *Similar arrangements are seldom seen publicly, although a case pitting two well-known companies like Apple and IBM has attracted more attention than most non-compete disputes. *The agreement clears Papermaster to go back to work on April 24.

The full declaration he'll sign, which is due in the first two weeks of July, and again during the first two weeks of October, can be seen below in full.

If Papermaster has any questions over whether certain information is confidential or if he wants to disclose once-confidential IBM information, he will have to ask IBM Vice President and Assistant General Counsel Ron Lauderdale first. *Lauderdale will make the determination "promptly, reasonably, and in good faith," and his decision is binding and not subject to review, meaning Papermaster risks a perjury conviction if he doesn't follow Lauderdale's directions.

These conditions expire on October 24, one year after Papermaster's departure from IBM. *At that time, the lawsuit and countersuit will be dropped. *If either or both parties violate the consent order, they could be held in contempt.



Any further terms of the settlement, financial or otherwise, were not listed in the court filings discovered by AppleInsider. *Yesterday Apple announced Papermaster would be joining the company as chief of iPod and iPhone development in April, noting briefly that "The litigation between IBM and Mark Papermaster has been resolved."

[ View this article at AppleInsider.com ]

[hmurchison]

With large companies laying people off by the thousands
how in the hell does an individual have to sign a declaration
to a former employer as a stipulation?

That is NOT a free market for employment and in my eyes a
breach of Papermaster's privacy.

Truth is IBM made the investment in Papermaster and there was
quid pro quo the got an outstanding employee. Had IBM sent
Papermaster packing to the unemployment line he'd have precious
few right to do anything but collect a pittance in UI benefits.

I think this was likely an agreement to provent a protracted legal
battle but I have a hard to believing that our Government would back
such frivolous cases.

[Virgil-TB2]

Ridiculous.

Sounds like IBM lost, but had to get something out of the deal to save face and to make it appear like their fears could be justified.

[copeland]

As any serious development involving Papermaster experience will show first results long after this 6 month period, what is IBM going to win?

[ouragan]

In a five-page Southern District of New York court filing dated yesterday, and signed by attorneys for both parties, Papermaster agrees to check in with Big Blue whenever he's not sure whether he's about to tread on confidential information. According to the document, the two sides reached the settlement last Friday.

Papermaster will also submit signed declarations, one in July and another in October, confirming he has not disclosed any of IBM's secrets nor does he intend to, under penalty of perjury. Similar arrangements are seldom seen publicly, although a case pitting two well-known companies like Apple and IBM has attracted more attention than most non-compete disputes. The agreement clears Papermaster to go back to work on April 24.

Papermaster will join Apple 6 months after his appointment and submit 2 sworn declarations to the Court certifying that he has not disclosed or used in his work for Apple any of IBM's secret intellectual property. By agreeing to do so, Papermaster will be able to cut in half the duration of the one year non competition clause he signed just 2 years ago.

IBM was well within its rights to insist that the provisions of the non competition clause be enforced by Courts. By the way, intellectual property means that it belongs to IBM, just like physical goods.

Employees are not free to discard the non competition agreements they sign just because they restrict the employment they can seek.

Apple is familiar with non competition agreements and cannot ignore them. Steve Jobs and Apple are not free to steal the intellectual property which belongs to IBM.

[Robin Huber]

Originally Posted by Virgil-TB2

Ridiculous.

Sounds like IBM lost, but had to get something out of the deal to save face and to make it appear like their fears could be justified.

I agree, what a bunch of butt-covering silliness. He can whisper anything he wants into Steve's ear.

[JohnnyKrz]

I think he should just call Apple before he comes in to work and tell them everything he knows about IBM. Okay, maybe not.

[Alonso Perez]

Originally Posted by Virgil-TB2

Ridiculous.

Sounds like IBM lost, but had to get something out of the deal to save face and to make it appear like their fears could be justified.

IBM had no case. They probably knew it though.

I think the whole intent was not about Paperclip, but about providing a negative incentive to other key employees who may be contemplating a similar switch. In that, it probably succeeded. While it won't keep huge companies like Apple from attracting anyone, it will make it harder for smaller companies that lack the legal resources to back an employee in such a situation.

[dreyfus2]

Maybe the Apple cafeteria should serve confinement loaf for the next six months...

[Johnny Mozzarella]

This reminds me of another famous case where an executive was forced out of a major computer company. He left and created a rival computer company that eventually took over the company that forced him out.

I don't believe he had a non-compete clause in his contract.

[Alonso Perez]

Originally Posted by Johnny Mozzarella

This reminds me of another famous case where an executive was forced out of a major computer company. He left and created a rival computer company that eventually took over the company that forced him out.

I don't believe he had a non-compete clause in his contract.

Actually I think he did, so the new company couldn't sell to consumers but had to focus on the workstation market, thus creating a robust platform. This is just an IIRC, so if anybody can correct this, please do.

[BlackSummerNight]

If they had no case, then why would he be ordered to sign anything?

Originally Posted by Alonso Perez

IBM had no case. They probably knew it though.

I think the whole intent was not about Paperclip, but about providing a negative incentive to other key employees who may be contemplating a similar switch. In that, it probably succeeded. While it won't keep huge companies like Apple from attracting anyone, it will make it harder for smaller companies that lack the legal resources to back an employee in such a situation.

[Abster2core]

Originally Posted by Robin Huber

I agree, what a bunch of butt-covering silliness. He can whisper anything he wants into Steve's ear.

No he can't and Steve wouldn't let him.

Countries have laws against companies 'stealing' employees from other companies. Otherwise, one could simply just take best out of a company, destroying it and the lives of those that were left behind.

IBM was in their right to protect their intellectual property. And for heavens sake, all they wanted in the first place was a guarantee that their annual strategic plans and developments in progress that Papermaster was involved in creating were not disclosed in any manner for a period of one year.

Certainly Papermaster was not harmed. In fact, such efforts by IBM to retain him or take the actions that they did most likely raised his level of importance.

Remember, that Apple has done virtually the same for others that have been attempted away. And trust me, Apple, in particular Steve Jobs, appreciates the laws which protects him as it does others.

[hmurchison]

Originally Posted by Abster2core

No he can't and Steve wouldn't let him.

Countries have laws against companies 'stealing' employees from other companies. Otherwise, one could simply just take best out of a company, destroying it and the lives of those that were left behind.

IBM was in their right to protect their intellectual property. And for heavens sake, all they wanted in the first place was a guarantee that their annual strategic plans and developments in progress that Paymaster was involved in creating were not disclosed in any manner for a period of one year.

Really. Since this is the US what laws in particular are you referencing? Employment law is pretty gray with regards to what rights a former employee has. In fact many states will likely start ruling that non-competes are unconstitutional. Which in a nutshell means that if an employer cannot make an oath to abstain from working in a similar field a requirement of employment it stands that an ex employee would be bound by even more tenous strings to the former company. IBM has no case.

http://www.sfgate.com/cgi-bin/articl...BUUH12716R.DTL


In a unanimous decision, the justices said state law since 1872 has forbidden what are called noncompete clauses that restrict management employees' options after they leave a company.

Nearly every other state allows such agreements, said Richard Frank, a San Francisco lawyer who has represented companies on both sides of the issue.

The ruling "advances the strong California policy favoring open competition and employee freedom," said Frank, who was not involved in the case. "Those have been drivers of the state's economy, especially in the technology area."

IBM will claim victory but they've had none.

[Johnny Mozzarella]

Originally Posted by Alonso Perez

I think the whole intent was not about Paperclip, but about providing a negative incentive to other key employees ...

Originally Posted by Abster2core

Certainly Paymaster was not harmed. In fact, such efforts by IBM to retain him or take the actions that they did most likely raised his level of importance ...

I'm guessing iPhone autocorrection?

[mark2005]

Originally Posted by BlackSummerNight

If they had no case, then why would he be ordered to sign anything?

So as not to get into stuck in litigation that would drag out beyond Apr 24.

He was not "ordered" to sign anything. This was a compromise that both Papermaster and IBM agreed to in order to end the litigation. The Court, as well, was agreeable to see it end.

[DHKOsta]

Originally Posted by hmurchison

I think this was likely an agreement to provent a protracted legal
battle but I have a hard to believing that our Government would back
such frivolous cases.

I think you're giving our government too much credit. I'd be willing to bet the Supreme Court would have been happy to rule on this.

[Cubert]

Ahhhh.....brings back memories of the NDA that I had to sign last year in exchange for a 6 month severance package when I left the hospital I was working at.

See, it pays to be in a few porn flicks and then have your boss find out - they run for the hills scared at what the public's reaction will be and all the potential negative publicity. Quite a good way to get out of a job you don't like.

[brlawyer]

Originally Posted by Johnny Mozzarella

This reminds me of another famous case where an executive was forced out of a major computer company. He left and created a rival computer company that eventually took over the company that forced him out.

I don't believe he had a non-compete clause in his contract.

Actually he did and he was sued (unsuccessfully; better yet, Apple settled out of court to save face) on similar stupid grounds. See below an excerpt from the excellent book Apple Confidential:

"Jobs’ resignation didn’t appease Apple. On September 23, the company filed a suit against Jobs and Page, enjoining them from using any proprietary information and charging Jobs with dereliction of his duties as chairman."

[NeilM]

Originally Posted by hmurchison

"In a unanimous decision, the justices said state law since 1872 has forbidden what are called noncompete clauses that restrict management employees' options after they leave a company.
...
The ruling 'advances the strong California policy favoring open competition and employee freedom,' said Frank, who was not involved in the case."

Although it may turn out to be a sign of things to come, it's worth emphasizing that the case cited above was in California, whereas IBM filed its case in New York. On the face of it IBM didn't seem to have made much of a case for themselves here, and the resolution comes down to Papermaster having to certify that he's not doing what both he and Apple said he wouldn't be doing anyway.

These issues are a balancing act. A company has the right to its intellectual property, but individuals have a right to choose where to work in their chosen field.

As usual the lawyers did OK though...

[THT]

Originally Posted by Alonso Perez

Actually I think he did, so the new company couldn't sell to consumers but had to focus on the workstation market, thus creating a robust platform. This is just an IIRC, so if anybody can correct this, please do.

Yup. Jobs, who also brought 5 very talented Apple folks with him to form NeXT, was sued by Apple and he had to agree to build computers that didn't compete with Apple's computers. If the same thing happened today, I think it would be a very long and protracted fight as Jobs' heart is in consumer devices and he really doesn't care that much about corporation or even educational machines that much.

What happens next with Papermaster? Uh, business as usual. OS X will be the core of all Apple devices short of the iPod shuffle/nano/classic. With him replacing Fadell, and Rubenstein, I'd imagine Apple will be branching out to devices beyond iPod touches or iPhones.

[Phone-UI-Guy]

I think the grey area here is that he signed the contract outside of CA. If he signed it in CA, it wouldn't worth anything. Since he signed it in a jurisdiction that it was legal in, it isn't clear if it would be enforceable. Obviously the agreement they came too is. I suspect he will be hands off on certain areas of the business until October.

While I have some sympathy for Papermaster, he was offered the years worth of salary to sit home until the year ended. My main complaint would be that he had to sign the agreement in 2006 under duress. I have to sign a COBC every year, but I don't really have a say in the matter... Sign it or your gone is my impression. How can I really be held accountable for such crap?

[Virgil-TB2]

Originally Posted by Alonso Perez

Actually I think he did, so the new company couldn't sell to consumers but had to focus on the workstation market, thus creating a robust platform. This is just an IIRC, so if anybody can correct this, please do.

Yeah, as far as I remember, one of the reasons NeXT had such a hard time of it was Apple was squeezing them hard over IP issues.

The whole "return of the saviour" thing the media does about jobs is mostly BS. Jobs was a bad manager and kind of a jerk before he was forced out. He wasn't doing Apple any favours at the time. Apple in return treated him like dirt while he was at NeXT, and did somersaults to try and avoid bringing him back. Only when all other options were gone (and some individuals at Apple itself) did they ask him back as a sort of "last resort." Most people at the time were thinking it might be a bad move, and Jobs proved them wrong by proving that he had actually grown up a bit.

There are a lot of young tards commenting on Engadget and Gizmodo (and some of the writers for said publications as well) that could really use the same lesson that Jobs had. Maturity wins every time.

[elroth]

Originally Posted by ouragan

Papermaster will join Apple 6 months after his appointment and submit 2 sworn declarations to the Court certifying that he has not disclosed or used in his work for Apple any of IBM's secret intellectual property. By agreeing to do so, Papermaster will be able to cut in half the duration of the one year non competition clause he signed just 2 years ago.

IBM was well within its rights to insist that the provisions of the non competition clause be enforced by Courts. By the way, intellectual property means that it belongs to IBM, just like physical goods.

Employees are not free to discard the non competition agreements they sign just because they restrict the employment they can seek.

Apple is familiar with non competition agreements and cannot ignore them. Steve Jobs and Apple are not free to steal the intellectual property which belongs to IBM.

These types of agreements many times do not hold up in court. IBM would have to prove that Apple is a competitor, which is not a given. In your world, IBM could say that any company is a competitor, and keep Papermaster from working anywhere. Just because there is a clause in an employment contract does not mean it is reasonable and enforceable.

And while New York allows non-compete clauses, Texas (where Papermaster worked) and California (where Apple is) do not. It would have been a very interesting court case to watch.

Disclosing confidential information is another issue, separate from the non-compete clause. Apple doesn't need IBM's intellectual property in its iPhone and iPod division.

[Abster2core]

Originally Posted by hmurchison

Really. Since this is the US what laws in particular are you referencing? Employment law is pretty gray with regards to what rights a former employee has. In fact many states will likely start ruling that non-competes are unconstitutional. Which in a nutshell means that if an employer cannot make an oath to abstain from working in a similar field a requirement of employment it stands that an ex employee would be bound by even more tenous strings to the former company. IBM has no case.

http://www.sfgate.com/cgi-bin/articl...BUUH12716R.DTL


In a unanimous decision, the justices said state law since 1872 has forbidden what are called noncompete clauses that restrict management employees' options after they leave a company.

Nearly every other state allows such agreements, said Richard Frank, a San Francisco lawyer who has represented companies on both sides of the issue.

The ruling "advances the strong California policy favoring open competition and employee freedom," said Frank, who was not involved in the case. "Those have been drivers of the state's economy, especially in the technology area."

IBM will claim victory but they've had none.

California? Different country. At least they think so.

As I previously wrote:

-------------------------------------

I would doubt that there is a single Fortune 500 company that doesn't have their management, especially those in R&D, Market/Planning and Financance/New Product Development contracted without a non-compete clause.

Certainly, shareholders in particular would be highly hesitant knowing that top R&D personnel could simply walk out the door and go across the street to the competition at a drop of the hat.

Heck, "Non-compete clauses are everywhere from restaurants and their chefs to basketball teams and their coaches."* Probably the biggest corporations that are very tight on NCC and NDA are those that do contract work for the Federal Government, especially defence contractors. And even the Feds themselves have a similar and even more binding agreements which are virtually holding for the rest of one's life.

What IBM is doing here is simply ensuring that its (company and shareholders) property rights are being protected. Papermaster got an offer he couldn't or didn't want to refuse. Apple did nothing wrong by offering the position. Surely Apple understands and agrees to the principle of NCC's as they themselves employ their use. As such, Papermaster's employment from IBM to Apple would be conditional. However, it should be noted that Papermaster may have forgotten his commitment (as it was a long time ago) or his understanding of it did not appear to conflict with the position he was being hired for. In either case, it was simply decided to let the ball fall were it may, and if need be, let the courts decide it a foul was committed.

For those who are in the position to have to sign a NCC, the rewards for doing so virtually keeps them out of the poor house. This does not fall in the realm of servitude or "you can't keep me from enjoying a livelihood." However, the treatment of such depends on where you are, the conditions it covered and the intent to which the move is being made in the first place.

Here is a good site to help explain Non Competition Agreements.†

"We have all heard urban myths - crocodiles attacking people in sewers; Jimmy Hoffa buried under Giants' Stadium in New Jersey. They sound real, but they are not. The distribution industry has such an urban myth. The myth is that non-compete clauses in manufacturers' representatives' contracts can be ignored because they do not mean anything. That statement is false. In almost every state, a tightly drawn non-competition agreement will be enforced by the courts. Even if the non-compete requirements are overly broad, the courts in many states will narrow them in order to enforce what the court feels is proper."

Perhaps this free article "Protect Trade Secrets from a Corporate Raid" will help to a better understanding. http://findarticles.com/p/articles/m...s_/ai_59579692

In any event, just wish that you get to be so presented with the opportunity. It can be a great negotiating tool. If they want you bad enough to consider your position that valuable, it obviously can raise the bar on all sides.

Another thing to consider. If you decide to dishonour your NCC, particularly if you were skipping to a major competitor and lied about it, just wonder how many companies would want to take a chance and hire you after that.

*http://virginianoncompete.blogspot.c...of-sports.html

† http://findarticles.com/p/articles/m...g=content;col1


Again, non-compete clause are part of every major sports franchise, pharmaceutical companies, and automobile manufacturers, etc. Biggest user of all is the Federal Government agencies and its contractors. If you don't think that employees of Boeing, Lockheed, Northrop Grumman, etc., are immune to NCCs you need your head read. Apple understands it well. Afterall, they like most companies, employ NCCs routinely when contracting their top employees, manufacturers and outside agencies.

[hmurchison]

Originally Posted by NeilM

Although it may turn out to be a sign of things to come, it's worth emphasizing that the case cited above was in California, whereas IBM filed its case in New York. On the face of it IBM didn't seem to have made much of a case for themselves here, and the resolution comes down to Papermaster having to certify that he's not doing what both he and Apple said he wouldn't be doing anyway.

Papermaster never worked in New York so IBM filing in that state is as dubious as if Apple were to suggest that CA statute and case decision applies. I wonder if this declaration has teeth. What happens if IBM feels like the declaration has not been done with honestly

Originally Posted by Phone-UI-Guy

I think the grey area here is that he signed the contract outside of CA. If he signed it in CA, it wouldn't worth anything. Since he signed it in a jurisdiction that it was legal in, it isn't clear if it would be enforceable. Obviously the agreement they came too is. I suspect he will be hands off on certain areas of the business until October.

While I have some sympathy for Papermaster, he was offered the years worth of salary to sit home until the year ended. My main complaint would be that he had to sign the agreement in 2006 under duress. I have to sign a COBC every year, but I don't really have a say in the matter... Sign it or your gone is my impression. How can I really be held accountable for such crap?

If I'm an attorney I don't give a damn where the contract was signed so long as there's a reputable case that I can refer to. California being a power town of technology only helps Papermasters case and Apple's legal team.

You having to sign a COBC is a violation of your rights plain and simple. You are basically being co-ersced to sign a document with the looming threat of your job. I'm for the protection of company IP and assets but citizen civil liberty takes precedence over the mere presumption of IP abuse. In short I think IBM only has a case if they can define to the courts their case for Papermaster's ursupation of their IP. Right now they're "if" and that doesn't fly when attempting to quash the right to work for a citizen

[BenRoethig]

Here's the part I'm not getting, Papermaster has to inform IBM if there's a conflict. Wouldn't he have to divulge what's doing at Apple and in doing so, wouldn't he be in a position to have to reveal Apple trade secrets to IBM?

Originally Posted by hmurchison

Papermaster never worked in New York so IBM filing in that state is as dubious as if Apple were to suggest that CA statute and case decision applies. I wonder if this declaration has teeth. What happens if IBM feels like the declaration has not been done with honestly

The suit was in federal court, so it doesn't matter.

[potterhead4]

Originally Posted by Johnny Mozzarella

I'm guessing iPhone autocorrection?

I certainly hope not.

[ktappe]

Originally Posted by Johnny Mozzarella

re: "Paperclip" & "Paymaster"
I'm guessing iPhone autocorrection?

Nope--iPhone does not autocorrect capitalized words.

[Alonso Perez]

Originally Posted by Johnny Mozzarella

I'm guessing iPhone autocorrection?

I've taken to calling Papermaster Paperclip. I'm sure I'm not the first guy to come up with this. It probably haunted him in high school.

But I just can't help it.

For one thing, "Papermaster" annoyingly reminds me of Ghostbusters.

For another, Paperclip is also a reference to Operation Paperclip, when the OSS (CIA precursor), recruited scientists and engineers who had worked for the Nazis. Here, Apple recruited a tech guy from IBM. IBM had done work for the Nazis. There is an extremely loose parallel, and I'm just having a bit of fun.

Papermaster is just a ridiculous name if you think about it, the kind that a bad novelist imitating Kafka might come up with, to name some bureaucrat.