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Steve Jobs allegedly threatened Palm with patent suit to force anti-poaching agreement

post #1 of 76
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A court document made public on Tuesday revealed that Apple cofounder Steve Jobs threatened to take legal action against Palm if the now-defunct company's CEO did not agree to anti-poaching measures.

Jobs
Steve Jobs at the iPad 2's unveiling.


The filing is part of a civil suit being leveled against a number of top tech companies, including Apple, Google and Intel, that claims the firms participated in illegal anti-poaching activities.

According to an in-court report from Reuters, the defendants tried to keep a number of sensitive documents sealed, but presiding Judge Lucy Koh denied the request, thus making Jobs' statements public.

The 2007 communication between Jobs and Edward Colligan was revealed as part of an affidavit from the former Palm CEO. In it, Colligan claims that Jobs attempted to pressure Palm into an anti-poaching agreement that would block each other's attempts at "stealing" valuable employees.

"Mr. Jobs also suggested that if Palm did not agree to such an arrangement, Palm could face lawsuits alleging infringement of Apple's many patents," Colligan said in his declaration.

The document furnished by the five plaintiffs includes an email correspondence between Jobs and Colligan where the late Apple chief executive alludes to leveraging his company's patent portfolio against Palm if it did not cooperate. In a sworn statement, Colligan described a phone call he had with Jobs regarding employees being "hired away" from Apple by Palm.

"As a solution, Mr. Jobs proposed an arrangement between Palm and Apple by which neither company would hire the other's employees, including high tech employees," he said. "Mr. Jobs also suggested that if Palm did not agree to such an arrangement, Palm could face lawsuits alleging infringement of Apple's many patents."

From Colligan's email to Jobs:

Your proposal that we agree that neither company will hire the other's employees, regardless of the individual's desires, is not only wrong, it is likely illegal.[...]Palm doesn't target other companies-we look for the best people we can find. l'd hope the same could be said about Apple1s practices. However, during the last year or so, as Apple geared up to compete with Palm in the phone space, Apple hired at least 2% of Palm's workforce. To put it in perspective, had Palm done the same, we'd have hired 300 folks from Apple. Instead, to my knowledge, we've hired just three.

Colligan also made clear that Palm was not intimidated by Jobs' threat of patent litigation and cited a patent portfolio the company acquired from Siemens, saying it too could respond with claims against the iPhone.

Jobs sent a response claiming that Apple employees were being "actively recruited using knowledge supplied by Jon Rubenstein [sic] and Fred Anderson, with Jon personally participating in the recruiting process."

Jobs' reply to Colligan's suggestion:

Just for the record, when Siemens sold their handset business to BenQ they didn't sell them their essential patents but rather just gave them a license. The patents they did sell to BenQ are not that great. We looked at them ourselves when they were for sale. I guess you guys felt differently and bought them. We are not concerned about them at all. My advice is to take a look at our patent portfolio before you make a final decision here.

Judge Koh has yet to decide whether to turn the civil suit into a class action which could cost the defendants "hundreds of millions of dollars," according to plaintiffs' counsel.

Most recently it was reported that Apple CEO Tim Cook was ordered to give a deposition regarding the matter. In addition to Cook, Google Executive Chairman Eric Schmidt and top ranking officials from the other defendant companies including Intel's Paul Otellini are also scheduled to be questioned in the coming weeks.

post #2 of 76

I'm surprised Apple would make such a threat, I mean, if anything, Palm would be the one suing given the (horrible) business performance. 

post #3 of 76
If anyone else did this, I'd think it was truly terrible. And it is. But Steve did it with such flair. How can you be mad?
post #4 of 76
And what's the wording to Jobs threat to sue for the patents. I see two quotes that aren't tied together in the way the headline suggests. Looks more like they were talking about two unrelated issues
post #5 of 76
Quote:
Originally Posted by charlituna View Post

And what's the wording to Jobs threat to sue for the patents. I see two quotes that aren't tied together in the way the headline suggests. Looks more like they were talking about two unrelated issues

 

It's possible. This is only a section. The turtlenecked one still made an illegal proposition, and now he's gone.

post #6 of 76

I prefer mine poached on toast.  Doh!

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post #7 of 76
Stuff like this anti-poaching lawsuit can really distract the attention of a company's management, particularly after the multiple shake ups last year. I'm really glad that I unloaded my shares when I did.
post #8 of 76
Maybe Steve just meant that if you hire another company's employees, you run the risk of them repeating some work they did at their old job, and thus open yourself up to patent lawsuits.
post #9 of 76
Quote:
Originally Posted by msuberly View Post

Stuff like this anti-poaching lawsuit can really distract the attention of a company's management, particularly after the multiple shake ups last year. I'm really glad that I unloaded my shares when I did.
What?!?
post #10 of 76
Quote:
Originally Posted by msuberly View Post

Stuff like this anti-poaching lawsuit can really distract the attention of a company's management, particularly after the multiple shake ups last year. I'm really glad that I unloaded my shares when I did.

Yes, it was while MS was focussed on their anti-trust lawsuit that everyone started beating them, when previously they had been an unstoppable juggernaut.

post #11 of 76
If you have a valuable skill you should be able to market that skill to whomever for the highest salary possible. Tech companies getting in the way of that should be punished.

Seen another way, this anti-compete measure is pretty much a blacklist that hurts someone's ability to earn a living.
post #12 of 76
Quote:
Originally Posted by jakeb View Post

If anyone else did this, I'd think it was truly terrible. And it is. But Steve did it with such flair. How can you be mad?

Rockefeller had flair too. Come to think of it, so had the moustached madman.

Evil is evil, and flair or style is unrelated.

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post #13 of 76
Quote:
Originally Posted by lightknight View Post

Rockefeller had flair too. Come to think of it, so had the moustached madman.

Evil is evil, and flair or style is unrelated.

Bill Gates is not moustached, nor particularly angry.

 

Cheers

post #14 of 76
Quote:
Originally Posted by minicapt View Post

Bill Gates is not moustached, nor particularly angry.

Cheers

Bill Gates has voice of a chipmunk though. Is that evil, or flair?
post #15 of 76
Quote:
Originally Posted by Technarchy View Post

If you have a valuable skill you should be able to market that skill to whomever for the highest salary possible. Tech companies getting in the way of that should be punished.

Seen another way, this anti-compete measure is pretty much a blacklist that hurts someone's ability to earn a living.

I don't think this will end up good for anyone involved. Is the information first surfaced from Jobs' bio?
post #16 of 76

I think a hard rain is gonna fall for this one.
 

post #17 of 76
Quote:
Originally Posted by jakeb View Post

If anyone else did this, I'd think it was truly terrible. And it is. But Steve did it with such flair. How can you be mad?

Flair in an email? It only seems that way because you know and idolize who wrote it. Change the author to Larry Page and will you see flair anymore? Regardless of wrote it, these words were careless, arrogant and could come back to haunt Apple. For sure, it's another issue that Apple could do without right now.


Edited by stelligent - 1/23/13 at 4:14am
post #18 of 76
Quote:
Originally Posted by Technarchy View Post

If you have a valuable skill you should be able to market that skill to whomever for the highest salary possible. Tech companies getting in the way of that should be punished.

You should be free to market it and they should be free to say no. For whatever reason they want, whether it's because they don't like you or because they don't want to p-off the company you currently work for that they might want to partner with on something one day.

post #19 of 76
Quote:
Originally Posted by matrix07 View Post

I don't think this will end up good for anyone involved.

I disagree. It will turn out to be a tempest in a teapot and I doubt if it's a major issue for Management. If there's any truth at all to the allegations, then the companies were wrong to reach such an agreement.

If they did it, they know it's wrong and will simply sign a consent decree agreeing never to do it again and the problem will go away.

If they didn't do it, they'll still sign a consent decree just to get the DOJ off their backs by agreeing not to do something that they wouldn't have done anyway.

The whole thing will go away.
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post #20 of 76
This is the type of story that tech blogs find juicy but the average joe could care less about.
post #21 of 76
Quote:
Originally Posted by minicapt View Post

Bill Gates is not moustached, nor particularly angry.

 

Cheers


Does he have style?

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post #22 of 76
Quote:
Originally Posted by Rogifan View Post

This is the type of story that tech blogs find juicy but the average joe could care less about.


So he does care? How much less could he care about this issue? You're being very imprecise!

 

But no worries, I couldn't care less about that :p

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post #23 of 76
Quote:
Originally Posted by jragosta View Post


I disagree. It will turn out to be a tempest in a teapot and I doubt if it's a major issue for Management. If there's any truth at all to the allegations, then the companies were wrong to reach such an agreement.

If they did it, they know it's wrong and will simply sign a consent decree agreeing never to do it again and the problem will go away.

If they didn't do it, they'll still sign a consent decree just to get the DOJ off their backs by agreeing not to do something that they wouldn't have done anyway.

The whole thing will go away.


I wonder if we could have part of the Pacific renamed to "Teapot Bay"...

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post #24 of 76
"Allegedly" my butt, they've got the documents and emails proving that's exactly what he did.

I hope the DOJ gets in on this, and makes an example out of every company involved in this little pact. It's despicable, and they should all be ashamed.
post #25 of 76
Quote:
Originally Posted by jragosta View Post
If they didn't do it, they'll still sign a consent decree just to get the DOJ off their backs by agreeing not to do something that they wouldn't have done anyway.

The whole thing will go away.

This article doesn't involve the DoJ investigation which was a separate issue. That was addressed over two years ago so you're way late.

http://www.justice.gov/opa/pr/2010/September/10-at-1076.html

 

If you read the AI article it's clear this one has to do with a civil suit before Judge Koh (remember her?), and perhaps becoming class-action certified. I personally don't think "the whole thing will go away". It certainly didn't end with the DoJ.


Edited by Gatorguy - 1/23/13 at 6:24am
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post #26 of 76

"Jobs sent a response claiming that Apple employees were being "actively recruited using knowledge supplied by Jon Rubenstein [sic] and Fred Anderson, with Jon personally participating in the recruiting process."

 

 

Colligan:

"we've hired just three."

 

Any mind from Apple is worth their weight in gold. Three is all they needed. Jobs wanted to put a stop to it and he actually made a fair offer, backed by some muscle. 

 

 


Quote:
Originally Posted by ascii View Post

Maybe Steve just meant that if you hire another company's employees, you run the risk of them repeating some work they did at their old job, and thus open yourself up to patent lawsuits.
 
 
Quite likely. 
post #27 of 76
Quote:
Originally Posted by ascii View Post

You should be free to market it and they should be free to say no. For whatever reason they want, whether it's because they don't like you or because they don't want to p-off the company you currently work for that they might want to partner with on something one day.

Collusion in setting prices (ie. cartels) in the marketplace is illegal.  

 

Collusion in setting wages and hiring employees is also illegal.  No reason why anyone should get a pass in this case.  At a time where the US has so many unemployed people, corporations colluding to prevent employees from negotiating in a free job market likely won't be looked on kindly by the masses...

post #28 of 76
Quote:
Originally Posted by Quadra 610 View Post
Any mind from Apple is worth their weight in gold. Three is all they needed. Jobs wanted to put a stop to it and he actually made a fair offer, backed by some muscle. 

 

Are you suggesting that three employees of Apple have more "value" than about 15 of Palm (which by the way become Apple employees).

Whatever your opinion is. Stuff like that is illegal, even when Apple is involved.

I thought Apple was kind of a moral company. I'm quite shocked about all this. It's just plain wrong.

post #29 of 76

deleted


Edited by MacRulez - 5/16/13 at 12:29pm
post #30 of 76

Putting the illegality of it aside for a second, I would interpret it as demoralizing for the average Apple employee.  When Apple announces products they often cite the time, intelligence and hard work that employees put into making top-notch products, portraying the employees as extremely valuable.  But anti-poaching agreements just say "yes you as an employee are extremely valuable but we certainly don't want to pay you full value (or let you get full value from another company)"

 

I wonder if Apple employees would see those accolades as pretty empty.  

post #31 of 76

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Edited by MacRulez - 5/16/13 at 12:29pm
post #32 of 76
Quote:
Originally Posted by Quadra 610 View Post

"Jobs sent a response claiming that Apple employees were being "actively recruited using knowledge supplied by Jon Rubenstein [sic] and Fred Anderson, with Jon personally participating in the recruiting process."

 

 

Colligan:

"we've hired just three."

 

Any mind from Apple is worth their weight in gold. Three is all they needed. Jobs wanted to put a stop to it and he actually made a fair offer, backed by some muscle. 

 

 


 

Ah, that would help explain Palm's response that what Steve Jobs was demanding was likely illegal, and definitely improper.1confused.gif

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post #33 of 76
Quote:
Originally Posted by MacRulez View Post

Unless today's call is unusually dire (which almost no one expects), you're going to look silly dumping shares right now.

 

While the evidence against Jobs seems pretty damning, Jobs is dead.  The hard part for prosecution in this case will be to demonstrate that whatever Jobs tried to pull off is still being continued by current management.

 

If that can't be demonstrated, there may still be penalties but likely much smaller, since it would all be a momentary thing long past.

 

I agree that tampering with the job market is a serious offense, but I don't think this suit will have much impact.

 

I think his/her point was that they had already unloaded their shares, not that they were unloading shares today because of this article (or the quarterly results).

post #34 of 76
All geniuses are also assholes. What's the point here?
post #35 of 76
Quote:
Originally Posted by Technarchy View Post

If you have a valuable skill you should be able to market that skill to whomever for the highest salary possible. Tech companies getting in the way of that should be punished.

Seen another way, this anti-compete measure is pretty much a blacklist that hurts someone's ability to earn a living.

I agree a person should be able to market their skills but Apple, like other companies worldwide, is trying to protect the intellectual property these people have been exposed to. It's like a football player joining a team long enough to know that team's playbook, then trying to sell themselves to another team while taking all the plays with them. Of course this is done but there are rules on how football players can move between teams. This is what Apple and others were trying to do to keep someone from financially benefiting from all the training and knowledge they received from the original company. The company I work for has this problem as well. We train a lot of people on fantastic equipment and see them leave to get much higher paying jobs elsewhere. This only benefits the person, it never benefits the companies who trained that person and gave them the skills in the first place.

post #36 of 76
Quote:
Originally Posted by Gatorguy View Post

This article doesn't involve the DoJ investigation which was a separate issue. That was addressed over two years ago so you're way late.
http://www.justice.gov/opa/pr/2010/September/10-at-1076.html

If you read the AI article it's clear this one has to do with a civil suit before Judge Koh (remember her?), and perhaps becoming class-action certified. I personally don't think "the whole thing will go away". It certainly didn't end with the DoJ.

It doesn't matter. AT WORST, the accused will pay a few million dollars to the people who were allegedly harmed and then sign an agreement not to do it again.

It just doesn't mean a thing in terms of any of the companies involved and barely even rises to nuisance value.
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post #37 of 76

Back between 1978 and 2002, when I was an exec at three different large corporations, we were always told that we could not seek more than two people from any one other comparable company unless they sought us out, not because there was any formal agreement, but because they were afraid we would get sued if we did.   I don't recall exactly what the lawsuit would have been, but it was something like "unfair competition".  

 

I'm not sure I agree with the Government on this one.   The agreement between these companies doesn't mean one can't go and work for another company.   It doesn't mean you can't be head-hunted.   It only means that you can't be called directly by another company, right?    And regardless of any agreements made and illegal or not, we've constantly heard of people leaving one company and going to another  (and sometimes back), so were/are these agreements actually enforced?   It's not like Apple hires people directly out of school - especially at the executive level, they all have extensive experience.

post #38 of 76

deleted


Edited by MacRulez - 5/16/13 at 12:28pm
post #39 of 76
Quote:
Originally Posted by rob53 View Post

I agree a person should be able to market their skills but Apple, like other companies worldwide, is trying to protect the intellectual property these people have been exposed to. It's like a football player joining a team long enough to know that team's playbook, then trying to sell themselves to another team while taking all the plays with them. Of course this is done but there are rules on how football players can move between teams. This is what Apple and others were trying to do to keep someone from financially benefiting from all the training and knowledge they received from the original company. The company I work for has this problem as well. We train a lot of people on fantastic equipment and see them leave to get much higher paying jobs elsewhere. This only benefits the person, it never benefits the companies who trained that person and gave them the skills in the first place.

The precedent on cases like this is pretty well established. In most states, and particularly in California, a non-compete or non-poaching agreement is considered to broad to be considered a valid tool for protecting intellectual property.

You can protect intellectual property with a nondisclosure agreement and if it is violated, you can sue to attempt to collect damages. Limiting people's working options involves a considerably more one-sided relationship than the courts are willing to accept.

There are exceptions, but they are limited. A non-compete agreement can be written in such a way to be enforceable, but it is not easy, particularly in CA. It must have a limited period of time and it must generally be limited to only direct competitors. Even then, it may not be enforceable if an employee is qualified to work only in one area (for example, let's say that you're a helicopter engineer whose entire career has been spent designing rotor blades and there are only 5 companies which make helicopter rotor blades. A company would probably not be successful in keeping you from working for those companies. They could argue that your experience could be used in other fields, but the company would have the burden of proof to show that you could get hired for a different job with no penalty in pay).

A non-poaching agreement is similarly over-broad. It does not directly address the issue of protecting IP as it would stop companies from hiring employees even if they don't have any relevant confidential information. That is not acceptable.

Now, it might theoretically be possible to have a non-poaching agreement that was so restrictive and carefully crafted that it might limit itself to people with proprietary information but not significantly limit career options for the employee (i.e., an agreement between Apple and Microsoft not to hire the chief OS designer into the equivalent position at the other company, but allowing for him to be hired for other jobs), but I can't see that happening. First, existing non-disclosure agreements are considered by the courts to be adequate protection. Second, the mere act of creating such an agreement would involve so much collaboration that the collusion would be obvious. Finally, it would simply be a red flag telling the competition who you considered to be key employees.

In the end, a non-poaching agreement (if it truly exists) is not acceptable and will not be accepted by the courts except in extremely rare cases. The companies really have no choice but to settle.
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post #40 of 76

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Edited by MacRulez - 5/16/13 at 12:28pm
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