Court Bans New Apple Exec from Work

A New York judge has ordered a new Apple executive to stop work until a legal dispute with IBM, his former employer, is settled. Mark Papermaster had been set to head the hardware side of Apple's iPod and iPhone division.

Papermaster was formerly IBM's executive in charge of blade servers, a technology which involves bare-bones servers taking their power from storage racks rather than individual power supplies. This makes much slimmer servers which is particularly useful for firms needing to store a large number of servers in a small space.

As part of his IBM contract, Papermaster is banned from working for a rival firm for a year after leaving the company. Apple believed this didn't apply because its target market is notably different than IBM's. It also argued that such a contract was inherently unfair because it effectively left Papermaster unable to leave IBM for fear of being unemployed for a year. IBM insists the clause is necessary to protect it against former employees sharing up-to-the-minute trade secrets with competitors.

Apple had just announced it hired Papermaster to take over as head of iPhone and iPod engineering and development. The firm felt that, because this was a different role to his IBM work, there was even less of a case for upholding the no-compete clause. (Source: cnet.com)

IBM took the case to court in its home state of New York and has earned an injunction temporarily barring Papermaster from working at Apple. The case will now go through a full legal process, with the judge scheduling a status update for November 18. (Source : bloomberg.com)

Apple's next move may be to have the case shifted to the company's own home state, California. While it will no doubt argue that's the right venue (given that's where Papermaster will or won't be working), the main motive would be that Californian courts are usually much less willing to uphold no-compete clauses in employment contracts.