Apple announced on Tuesday that former IBM executive Mark Papermaster has resolved his dispute with IBM over a non-compete agreement and will start leading Apple's iPhone group on 24 April.
IBM had sued Papermaster for allegedly violating the terms of a non-compete agreement in agreeing to join Apple as senior vice president of Devices Hardware Engineering, claiming Papermaster would be in a position to divulge important IBM trade secrets. The two parties exchanged briefing papers for a few months but apparently found a way to settle their differences.
Bruce Meyer, Papermaster's lead attorney at Weil, Gotshal & Manges, declined to comment on the settlement and referred all inquiries to Apple, which did not immediately return a call seeking comment.
In a statement, IBM said Papermaster had agreed that after his start date he "will remain subject... to all of his contractual and other legal duties to IBM, including the obligation not to use or disclose IBM's confidential information".
The statement added: "Mr Papermaster will be required to certify, in July 2009 and again in October 2009, that he has complied with his legal obligations not to use or disclose IBM's confidential or proprietary information."
The settlement frees Papermaster to replace Tony Fadell, who stepped into a senior adviser role last year, and report directly to chief executive Steve Jobs in heading up iPhone and iPod hardware development. The leadership transition has been a bit thornier than Apple would probably have preferred.
After a brief courtship early in 2008 for a different position, Apple identified Papermaster as the right candidate to head up perhaps their most cutting-edge development team in September, and he left IBM a month later to pursue what he called "the opportunity of a lifetime".
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But IBM, in what was viewed in part as a message to its employees, sued Papermaster for violating a 2006 non-compete agreement on the basis that Apple and IBM competed in the server and chip markets, even though Papermaster would not have been working in either of those capacities for Apple.
The problem for IBM, in this case, was that to argue that Papermaster would be in a position to spill its trade secrets, the company would have had to discuss those secrets in front of a judge. And likewise for Apple, in order to prove that Papermaster wouldn't be leading an effort to get the company immersed in chip development for game consoles, it would have had to shed some light on its future plans.
A settlement always seemed the most obvious outcome, and that is where Papermaster, IBM and Apple found themselves on Tuesday. As noted, Papermaster will have to recertify that he will not divulge IBM secrets to Apple as part of the initial agreement, and then do so again in three-month increments until 24 October, the first anniversary of his departure from IBM, when the non-compete agreement expires.
Papermaster will have to get started while Jobs is on medical leave, though Apple has said Jobs, due to return in June, remains involved in "major strategic decisions", and the endgame of this particular dispute probably qualified.
Papermaster's primary background is in chip development, and he spent the last several years involved with IBM's blade server design group. But Apple was most impressed by his leadership skills, noting in a court filing that it "hired Mark Papermaster because he has strong general engineering skills, is an outstanding leader, and because we believe he will be a good cultural match at Apple".
