IBM keeps choke-hold on Apple’s Papermaster, until October 24

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IBM keeps choke-hold on Apple's Papermaster, until October 24

Chicago (IL) – IBM will keep a very close eye on Mark Papermaster, its ex-top executive
and Apple’s new chief of iPod and iPhone hardware development. New
court filing reveal that the two signed a declaration which legally
binds Papermaster to check in with IBM’s legal counsel whenever he’s
unsure if anything about his new job at Apple might clash with IBM’s
trade secrets. In addition, Papermaster is required to sign and deliver
two such declarations in July and October and repeat, under penalty or
perjury, that he has not violated a non-compete agreement with IBM.
These conditions are set to expire after October 24, 2009, a date one year after
Papermaster left IBM.

As TG Daily reported
yesterday, Apple announced that Papermaster is now clear to step in
on April
24 as the new chief of iPod and iPhone hardware development. The consumer electronics giant hired Papermaster as a successor to Tony
Fadell who recently retired
but retained his “advisor to the CEO” status. However, a settlement
between IBM and its ex-“top exec” comes with some fine print. According to
the usually well-informed AppleInsider, Papermaster signed
court-governed documents which state he has not divulged IBM’s trade
secrets
while working for Apple.

The document legally binds the
executive to check in with IBM’s vice president and chief counsel Ron
Lauderdale whenever he’s unsure if anything about his new job at Apple
might violate the non-compete agreement he signed with IBM on June 21,
2006. If Papermaster pursues problematic activities at Apple despite
Lauderdale’s possible objection, which is not subject to review, he
could face a perjury conviction. In addition, Papermaster must sign two more such declarations, one in July and another in the
first half of October. These requirements are set to expire on October
24, which would coincide with one full year after Papermaster resigned
at IBM, at which time IBM’s lawsuit (and Papermaster’s countersuit) will be
rendered null.

IBM’s insurance policy

A copy of the five-page declaration, obtained by AppleInsider, specifically states that Mark Papermaster “has not” and
“does not intend” to disclose or otherwise use in any way IBM’s trade
secrets other than “information that IBM has publicly disclosed or
which otherwise has become public.” In addition, the document says that
Papermaster “will abide by determination” of IBM’s legal counsel, which
will be made “promptly, reasonably and in good faith.” Both parties
agree that IBM’s determination shall be “be final and binding and not subject to
review in any way.”

Such
an unexpected turn of events throws new light on the sudden resolution over Papermaster’s employment dispute which also speaks of IBM’s
fear that its chip expert could misuse trade secrets to develop
competing products for Apple. Despite the fact that Apple appointed
Papermaster to lead its iPod and iPhone hardware teams (who share little
in common with IBM’s server technology), Big Blue apparently wanted this insurance policy. One could read this as an indication that IBM does
not entirely trust either Papermaster or Apple. In addition, it may
also indicate Apple does in fact plan substantial hardware
changes for future gadgets. If true, then this plan might indeed call
for minor “borrowing” of chip designs used in servers.

Conclusion

In
my opinion, Apple, IBM and Papermaster are all treading the fine line
between the desire to take full advantage of Papermaster’s chip
expertise and the need to do the right thing. Apple’s press release yesterday pronounced the litigation between IBM and Mark Papermaster “resolved,”
having highlighted Papermaster’s product and technology experience
without emphasizing his chip expertise and deep knowledge of server
architectures.

If the carefully worded official statement is any
indication, Apple has no interest in downloading Papermaster’s “IBM
brain.” However, the acquired P.A. Semi engineers and publicly stated
intention to design system-on-a-chip solutions create the basis for a
reasonable doubt that there is, in fact, more going on behind the curtains at
Cupertino than meets the eye (or at least what Apple’s PR would like us to
believe).