When IBM first filed a lawsuit against Mark Papermaster, attempting to prevent him from joining Apple, they only had to pay a $350 filing fee to pursue the case. Now, a judge is ordering IBM to put up a $3 Million bond to cover any wrongful damages or costs Papermaster may encounter.
In an attempt to assess the amount of damages that Papermaster may ensue should the injunction be seen as a mistake, U.S. District Judge, Kenneth Karas, has ordered IBM to put up an appropriate bond on Tuesday. Seeing as how the district courts are allowed “wide discretion” in assessing a proper amount, Karas stated:
“Here, based on a careful reading of the letters sent by the Parties to the Court, which are being filed under seal, the Court finds that a bond in the amount of $3,000,000 is appropriate to guarantee payment of the costs and damages that Defendant may incur…”
Fortune points out that following Karas’ order, Papermaster’s legal team had filed counterclaims to IBM’s suit, admitting only indisputable facts, even denying that Papermaster had ever worked for IBM in the first place. While IBM and Apple make claims that they are not even in competition, it has been stated that Papermaster was not hired to do work that would conflict with IBM. Even if that were the case, Papermaster’s lawyers insist that IBM’s noncompetition agreement is inordinately broad. Moreover, his legal counsel argues that the agreement is null and void in the state of Texas, where Papermaster has spent the past 17 years, as well as in California, the home of Apple’s headquarters. A status conference has been set for Tuesday, November 18 at 10:00 a.m. in the US District Court, Southern District of New York, White Plains.
The Papermaster Saga:
READ → – Apple Poaches Top IBM Chip Designer, IBM Sues Back
READ → – Mark Papermaster’s Bio Removed From Apple’s Website
READ → – Papermaster Ordered to Stop Working, Claims He Did Nothing Wrong
READ → – Tony Fadell, Senior VP of iPod Division, Leaves Apple
READ → – Apple and IBM Set to Clash Over Executive Poaching
READ → – Tony Fadell to Remain as Special Advisor to Steve Jobs
READ → – Apple Issues Press Release Announcing Papermaster’s Arrival
Update: Cnet’s Tom Krazit points us to some more information clarifying Papermaster’s counterclaim against IBM. As we briefly explained above, “Papermaster’s lawyers insist that IBM’s noncompetition agreement is inordinately broad.”
The “Business Enterprise” restriction is unreasonably broad in that it purports to restrict Mr. Papermaster from going to work for any company that engages in competition with his former business unit to any extent, even if Mr. Papermaster will not be working for the part of the company that does so. Likewise, the “significant competitor or major competitor” prong purports to restrict Mr. Papermaster from going to work for one of these companies even if the work that Mr. Papermaster will be doing is completely unrelated to the work he was doing at IBM. These provisions are not necessary to protect any legitimate interests of IBM.
The Noncompetition Agreement is also unreasonably broad in that it purports to impose an unreasonably lengthy time limitation. In the world of technology, any trade secrets that Mr. Papermaster possesses would lose their value prior to the expiration of a year. The purported geographic scope of the “Restricted Area” is similarly unreasonable. Mr. Papermaster has resided and worked in Austin, Texas for the past 17 years, yet the language of the Noncompetition Agreement purports to restrict him from working anywhere in the world based on the global scope of IBM’s business. Again, these restrictions are not necessary to protect any legitimate interests of IBM.
• IBM’s complaint: [PDF]
• Papermaster’s declaration [PDF]
• Judge Karas’ order [PDF]
• Papermaster’s objections [PDF]
5 Comments to “Judge Orders IBM to Pay $3 Million Papermaster Bond [Update]”
Can I just ask why this is even taking place? I mean, Apple has been poaching execs for a long time. Did IBM think that they were going to quietly be able to stop Papermaster form joining big blue? If so, they were DEAD wrong.
I’m sure Apple offered Papermaster a killer offer, like you’ve written “A once in a lifetime deal” — Do you think he’s going to hold his head in shame and crawl back to the stuffy world of IBM? Especially after getting a glimpse of what working for Jobs at Cupertino would be like? NO WAY! Papermaster’s going to do everything he can to keep his position with Apple.
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My questions is, aside from ‘racetrack technology’ – what specifically is IBM afraid of losing to Apple, or afraid of Apple finding out. At this point, they should let Papermaster do his thing for the sake of innovation.
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He wasn’t even their TOP CHOICE !!! What is all the commotion IBM! Let him go in peace. He served his time to your company. Let him move on!
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IBM’s hissy fit just signals how far they are willing to go to punish the people who find better jobs. If they treated the people working at their facilities like human beings then this wouldn’t be an issue.
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There are two kinds of people working for IBM… intelligent, innovative types who will be scooped up by other companies and sniveling worms who are not wanted elsewhere so they become low-level managers at IBM, taking out their frustration on all the tech folks who haven’t found a better employer yet.
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