Trial set for IBM exec's move to Apple
International Business Machines Corp. and its ex-employee Mark Papermaster will go to trial Feb. 9 on whether Papermaster can return to his job in charge of Apple Inc.'s iPod and iPhone divisions, a judge ruled.
IBM, the largest computer-services company, sued Papermaster after he left for Apple last month, saying the move violated an employment contract in which he agreed not to work for a competitor within a year of leaving his job.
``There is a palpable interest in getting this case resolved,'' U.S. District Judge Kenneth Karas said today at a hearing in White Plains, New York. He put the case on an expedited schedule.
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.
On Nov. 7, Karas ordered that Papermaster ``immediately cease his employment with Apple Inc. until further order of this court'' because he may have violated the contract.
In his position at Apple, Papermaster was to report directly to Chief Executive Officer Steve Jobs and take responsibility 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.
IBM Secrets
IBM, based in Armonk, New York, claimed in its lawsuit that Papermaster, a 26-year company veteran, would use confidential information about IBM's microchips and server technology at Apple.
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.
Papermaster claimed in court filings that the two companies are not major competitors and said his move to Apple didn't violate the terms of his employment agreement.
``IBM primarily provides business enterprise services, while Apple's primary business is the design, manufacturing and marketing of consumer electronic products,'' Papermaster said in a Nov. 13 court filing.
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.
IPod Sales
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.
The case is International Business Machines Corp. v. Papermaster, 08-cv-9078, U.S. District Court, Southern District of New York (White Plains).