Judge Explains Why He Sided With IBM In Papermaster Case

U.S. Federal District Judge Kenneth Karas in White Plains, N.Y., made his opinion public Monday, even though he ruled in IBM's favor back on Nov. 10.

Here's a recap of the suit so far.

IBM filed suit against Papermaster after he resigned to take over as head of Apple's iPod and iPhone division. IBM's alleged that by joining Apple, Papermaster violated a noncompete agreement he signed in which he agreed not to work for a competitor for one year if he left the company.

IBM also sought to block Papermaster's move because as a senior executive, he was aware of highly confidential trade secrets and sensitive information "in the design, manufacture and sale of electronic devices, including servers, personal computers and microprocessors."

Papermaster refuted IBM's claims that the companies could be considered competitors. In his own court filing, Papermaster's lawyers said that his "role at Apple will not require him to use any confidential information he may have acquired in his role at IBM."

"To the best of my knowledge, IBM does not design, manufacture or market consumer electronic products," Papermaster said in the filing. "Apple, on the other hand, is in the business of designing, manufacturing and marketing consumer-oriented hardware and related products. I do not recall a single instance of Apple being described as a competitor to IBM during my entire tenure at IBM."

However, in his newly released opinion, Judge Karas agreed with IBM, saying that Papermaster was "inculcated" with some of IBM's most sensitive and closely-guarded technical and strategic secrets and that "it is no great leap for the court to find the plaintiff has met its burden of showing a likelihood of irreparable harm."

Karas said that IBM demonstrated that its business strategy continues to be in the development of cutting-edge microprocessors that have "application across the full spectrum of electronic products."

"Of course, the court recognizes that IBM does not sell MP3 players or cell phones that compete with the iPod or iPhone," the judge wrote. "But IBM does sell the microprocessor technology that provides the brains for those products and competes for that business. To profit from the sale and manufacture of such microprocessors, IBM relies heavily on its Power architecture, and has employed Mr. Papermaster as its top expert in the development and application of that technology."

In his opinion, Karas went on to say that it is likely that in his new position as Apple's senior vice president of device hardware engineering, Papermaster was specifically hired to help Apple make the iPod and iPhone more profitable.

"To do that, it is obvious that Mr. Papermaster will be responsible for improving these products, that is, to make sure that they store more information, do it more quickly and use less power in doing so," Karas wrote.

Karas went on to say that any improvements in the iPod and iPhone would be due to microprocessor design, and that IBM's business includes development of microprocessors for consumer devices.

"Thus, it is likely that Mr. Papermaster inevitably will draw upon his experience and expertise in microprocessors and the Power architecture, which he gained from his many years at IBM, and which Apple found so impressive , to make sure that the iPod and iPhone are fitted with the best available microprocessor technology and at a lower cost."

"By drawing upon IBM-developed proprietary information in these fields, Mr. Papermaster will harm in unquantifiable ways IBM's ability to compete for the sale of products that could be used in the iPods and iPhones of the future, thus improperly placing Mr. Papermaster in direct competition with his former employer."

A trial date has not been announced, but in his filed opinion, Karas ordered an expedited discovery schedule so that the trial takes place "as soon as practicable after discovery is completed."