Judge Orders Newly Hired Apple VP to Stop Work

A federal judge on Friday ordered a former IBM executive who was recently hired by Apple Inc. to stop working for the Cupertino, Calif. company, court documents showed.

U.S. District Court Judge Kenneth Karas ruled that Mark Papermaster, who was announced as Apple's new vice president of devices hardware engineering only last Tuesday, must "immediately cease his employment with Apple Inc. until further Order of this Court." Karas did not explain his reasons for the order, saying only that he would issue an opinion at a later date.

Friday's move was the result of an IBM motion for a preliminary injunction designed to block Papermaster's move to Apple. On Oct. 22, IBM sued Papermaster , claiming that a non-competition agreement he signed in 2006 bars him from working for competitors for a year after leaving the company. According to IBM, Papermaster had information of "highly confidential IBM trade secrets" that would "irreparably harm" the company if he's allowed to work for Apple.

Apple hired Papermaster to run its iPod and iPhone engineering group. The same day that Apple announced Papermaster's hire, it also said Tony Fadell, who has been credited with jump-starting the company's iPod business, was leaving his position as senior vice president in charge of the player, but would remain as an advisor to Jobs.

Papermaster, a 26-year veteran of IBM, had been the vice president of blade server development until he resigned Oct, 13. According to court documents IBM filed last month, Papermaster "is in possession of significant and highly-confidential IBM trade secrets and know how, as well as highly sensitive information regarding business strategy and long-term opportunities." Taking the Apple job, IBM maintained, would be a violation of his noncompetition agreement.

In a response filed with Karas on Thursday, the day before the judge ruled against him, Papermaster countered IBM's claims.

"Apple hired Mr. Papermaster not because of any specific knowledge or experience he gained at IBM, but for his general skill as an engineer and his strong management skills," the memorandum submitted to Karas read. "Nothing about his new job will implicate any trade secrets from IBM."

Papermaster's objection to the proposed injunction also claimed that "Apple and IBM are not even competitors," and staked his argument on the focus by each. Apple, he argued, is focused on consumers, while IBM targeted businesses, particularly large companies.

He also alleged that IBM did not restrict his access to the IBM network or ask him to clean out his desk and leave immediately when he first gave notice on Oct. 13, but instead accepted his two-week notice. "After Mr. Papermaster informed IBM that he had accepted a job at Apple, IBM allowed him to continue working at IBM for two entire weeks, with unfettered access to all of his files and to IBM's entire computer network -- hardly what one would expect when an executive is leaving for a competitor," Papermaster's filing said.

"Given its conduct, IBM's claim that it will suffer irreparable harm or hardship due to 'inevitable disclosure' of 'trade secrets' is absurd," Papermaster continued.

Elsewhere in the filing, Papermaster revealed that Apple had approached him in January 2008, and after talking with him about an unspecified position, offered him a position developing computer hardware. Papermaster declined the offer, however.

In September, Apple again contacted Papermaster, which led to more meetings with Jobs and others in early October. After he declined a counter-offer 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.

"The job at Apple is a once-in-a-lifetime opportunity for Mr. Papermaster," his filing said. "If Mr. Papermaster is forced to 'sit out' of the electronics industry, he will not be able to find a comparable position in a year -- indeed, it is questionable whether a truly 'comparable' position even exists."

However, Friday's ruling by Karas puts Papermaster's employment with Apple on hold. In his order, Karas slated a conference for Nov. 18, and told the parties to "discuss beforehand, an expedited scheduled for discovery and trial."

Subscribe to the Business Brief Newsletter

Comments