IBM forces iPod exec to stop working

International Business Machines Corp. won a court order forcing Apple Inc.'s new executive in charge of the iPod and iPhone devices to stop work immediately because he may have violated an agreement with IBM, his former employer.

The executive, Mark Papermaster, left for Apple last month. IBM sued Papermaster, saying the move violated an employment contract in which he agreed not to work for a competitor within a year of leaving his job.

Papermaster ``will immediately cease his employment with Apple Inc. until further order of this court,'' U.S. District Judge Kenneth Karas in White Plains, New York, said yesterday in an order issued after markets closed.

Apple announced Nov. 4 that Papermaster had joined the Cupertino, California-based company as a senior vice president overseeing the engineering of the company's portable music player and mobile phone.

``We are gratified that the court agrees with our request,'' Fred McNeese, an IBM spokesman, said.

``We will comply with the court's order, but are confident that Mark Papermaster will be able to ultimately join Apple when this dust settles,'' said Steve Dowling, an Apple spokesman.

At Apple, Papermaster has reported directly to Chief Executive Officer Steve Jobs and is responsible for developing the iPod and iPhone products, Papermaster's attorney, Timothy Hardwicke, told Karas at a Nov. 6 hearing.

``He's got a once-in-a-lifetime job working directly with Steve Jobs,'' Hardwicke said, adding that Papermaster would be ``punished'' if Karas stopped him from working at Apple.

Fadell's Successor

Papermaster succeeded Senior Vice President Tony Fadell, who said Nov. 4 he will reduce his role at the company and remain an adviser. Fadell took over as head of the iPod division in April 2006.

Sales of the iPod have exceeded 174 million units, making it the best-selling digital music player in the U.S., according to market researcher NPD Group Inc.

Apple said it sold a record 6.89 million iPhones last quarter and that, after setting aside a subscription accounting standard, iPhone sales were about $4.6 billion, or 39 percent of Apple's total business.

IBM, based in Armonk, New York, the largest computer- services company, claimed in its lawsuit that Papermaster, a 26-year company veteran, would use confidential information about IBM's microchips and server technology in his position at Apple.

``IBM can't survive if the know-how and information in the minds of people like Mark Papermaster go to a competitor,'' IBM attorney Stephen Madsen told the judge.

Access to Secrets

As one of the top 300 managers at IBM, Papermaster had access to confidential information including corporate strategy, business plans and marketing material, according to IBM.

``Because of that access, IBM has to be able to protect itself from the risk that someone in Mark Papermaster's position would take that information and export it elsewhere,'' Madsen said.

Papermaster's attorney labeled as ``speculative'' IBM's assertion that Papermaster would use its trade secrets at Apple.

The executive's position at Apple involves ``entirely different'' technology from what he managed at IBM, and the two companies aren't competitors, Papermaster said in court papers.

He was hired by Apple because of his managerial skills rather than technology expertise, the executive said.

The case is International Business Machines Corp. v. Papermaster, 08-cv-9078, U.S. District Court, Southern District of New York (White Plains).