From Wikipedia, the free encyclopedia IBM v. Papermaster
IBM v. Papermaster
IBM v. Papermaster Inevitable Disclosure
IBM claimed that because of the information Papermas-
ter had access to, including trade secrets, there was "sub-
stantial risk or Mr. Papermaster disclosing this informa-
tion to IBM’s detriment" which would result in irrepara-
ble harm. They argued inevitable disclosure, stating that
because of Papermaster’s position and responsibilities at
Court United States District Court, Southern District Apple it was inevitable for him to apply knowledge
of New York learned at IBM to his work at Apple, thus aiding a com-
petitor and harming IBM. Papermaster claimed that he
Full case International Business Machines Corporation v.
name Mark D. Papermaster
could recall only two inconsequential areas in which Ap-
ple was, and only temporarily, in direct competition with
Citation(s) No. 08-9078, 2008 U.S. Dist IBM. Industry analysis disagreed and found Apple and
Judge(s) Kenneth M. Karas IBM to be direct competitors.[1] Papermaster had signed
sitting the Noncompetition Agreement which clearly stated that
any breach of the agreement would cause irreparable
Case opinions
harm. Judge Karas also found that, "Because Mr. Paper-
Motion for preliminary injunctive relief granted master has been inculcated with some of IBM’s most sen-
sitive and closely-guarded technical and strategic se-
Keywords
crets, it is no great leap for the Court to find that Plaintiff
non-compete clause, trade secret has met its burden of showing likelihood of irreparable
harm."[1] This is also despite an employment agreement
In 2008, Mark Papermaster, IBM’s Vice President of the Papermaster signed with Apple which stated explicitly
Blade Development Unit, became the subject of a notable that he would not disclose trade secrets from prior em-
trade secret misappropriation and non-compete clause ployers. Karas writes that the Court doesn’t believe
case when he announced a plan to move to Apple as Se- Papermaster would act "dishonorably" but that he
nior Vice President of Devices Hardware Engineering. On couldn’t help but inadvertently share some information
October 22, 2008, IBM filed a complaint against Paper- that could be considered a trade secret.
master claiming breach of contract and misappropriation
of trade secrets. They sought a preliminary injunction
to prevent Papermaster from working at Apple, claiming Enforceability of Noncompeti-
his employment violated Noncompetition Agreement.[1] tion Agreement
The Court also considered whether or not the noncom-
Restraining Order petition agreement itself was reasonable and therefore
IBM did not learn until the first hearing that Papermaster enforceable. Karas found that, given IBM’s international
had already started working for Apple, and immediately business, the geographic scope was necessary and the
filed for a restraining order to enjoin him from contin- time restriction of one year was reasonable. Additionally,
uing to work. Judge Kenneth Karas of the United States because of the similarity of the position at Apple to is
District Court in the Southern District of New York heard work at IBM, the agreement was needed to prevent inci-
the case and granted IBM’s request. Before releasing the dental misappropriation of IBM trade secrets. Critics be-
public opinion, Judge Karas ruled that IBM must pay a lieve the opinion could have repercussions such as "ex-
$3,000,000 bond to Papermaster for any costs or damages panding inevitable disclosure doctrine" to the detriment
that Papermaster might incur, meanwhile still unable to of anybody attempting to further their career in a partic-
work at Apple.[2] ular field by moving to another company in the same in-
dustry.[3]
In considering whether or not the non-compete
clause was caused undue hardship to Papermaster, the
Court weighed the agreement with IBM against the once-
1
From Wikipedia, the free encyclopedia IBM v. Papermaster
in-a-lifetime opportunity of the SVP position. Judge [2] "IBM Forced to Pay $3 Million to Ex-Staffer
Karas concluded that, since intellectual property is IBM’s (Papermaster-Apple Case)".
most valued asset, the cost of trade secret disclosure to http://news.softpedia.com/news/IBM-Forced-to-
IBM outweighed the cost to Papermaster in delaying the Pay-3-Million-to-Ex-Staffer-Papermaster-Apple-
opportunity.[1]. The case was set to go to trial. Case-98026.shtml. Retrieved 2009-01-20.
"According to Computerworld, the $3 million bond
Settlement is designed to pay for any costs or damages that
Papermaster might suffer, should it be proved that
On 27 January 2009 it was announced that Papermaster’s IBM wasn’t entitled to an injunction."
lawsuit with IBM had been settled and that he’d take over [3] Altieri, Peter and David Clark, A New Byte of the
Senior Vice President of Devices Hardware Engineering "Inevitable Disclosure" Apple, EBG Trade Secrets &
at Apple on 24 April 2009, replacing Tony Fadell, who Noncompete Blog (February 12, 2009).
stepped down some months earlier.[4] The settlement re- [4] "Mark Papermaster to Begin at Apple as Senior
quires that Papermaster make two scheduled court certi- Vice President of Devices Hardware Engineering on
fications - the first having occurred on July 2009 and an- April 24". Apple Inc.. http://www.apple.com/pr/
other in October 2009 - to testify that he will protect IBM library/2009/01/27papermaster.html.
trade secrets.[5] [5] Beyers, Tim (January 30, 2009). "Big Blue Is
Watching You, Apple". The Motley Fool.
References http://www.fool.com/investing/general/2009/01/
30/big-blue-is-watching-you-apple.aspx.
[1] ^ IBM v. Papermaster, No. 08-9078, 2008 U.S. Dist.
LEXIS 95516 (S.D.N.Y. Nov. 21, 2008).
Retrieved from "http://en.wikipedia.org/w/index.php?title=IBM_v._Papermaster&oldid=432751807"
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