IBM's lawsuit to block former Vice President Mark Papermaster from taking a position at Apple has been settled. Apple announced Papermaster will begin his new job in April as senior vice president of devices engineering, reporting directly to CEO Steve Jobs.
In October, IBM sued Papermaster, a 25-year IBM veteran, saying he breached a noncompete contract by accepting a position at Apple. Papermaster has a master's degree in electrical engineering.
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IBM listed several reasons for the suit, including protecting its intellectual property and trade secrets, and Papermaster's noncompete contract, which barred him from working for any competitor for up to one year after his IBM employment ended. Papermaster agreed that going against IBM's contract would cause irreparable harm to IBM.
Papermaster's involvement in IBM's integration and values team (IVT), a group of more than 300 senior managers, was also a basis for the lawsuit. That group is responsible for IBM's most significant and challenging issues, according to court documents.
"The confidential information to which Mr. Papermaster has become privy based on his membership in the IVT and employment with the company represents the product of IBM's substantial investment in research and innovation and is critical to IBM's competitive success," court documents said.
At the core of the litigation was Apple's acquisition of P.A. Semi. Apple was not previously considered an IBM competitor, but buying P.A. Semi last year changed that.
Analysts are speculating that the settlement between IBM and Papermaster means Papermaster agreed to respect confidentiality agreements with IBM.
"We saw what IBM's concerns were, but ... the fact that they resolved this meant that they were able to figure out and respond to confidentiality agreements," said technology analyst Michael Gartenberg.
With the litigation settled, Papermaster will focus on growing Apple's iPhone and iPod businesses. His employment comes at a time when there is attention on Jobs, his health, and the stability of the company if he should leave.
"This is more about day-to-day operations and about the people who design, build and bring the product to market beyond the function of the CEO," Gartenberg said. "It is the point that there are people like this out there who have the skills to create and innovate these products moving forward. Apple is able to attract real senior talent like this, and this will set the stage for its next wave of innovation."
With the iPhone and the iPhone 3G as well as the iPod selling well, the question is whether Apple can continue innovating on those devices.
"I am sure innovation is not over; it can't be over," said Gartner analyst Carolina Milanesi. "As (Apple) mentioned on the earnings call, they are still way ahead of their competition as far as usability, but this must not stop them from continuing to innovate, and I do not think it will. On the iPhone, specifically, there is more they can do from a form factor point of view."