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Newly fired Apple iPod chief told to not report to work by judge

When Apple, Inc. (NASDAQ: AAPL) snatched Mark Papermaster from IBM Corp. (NYSE: IBM) just last week, the move ended up making many analysts scratch their collective heads. Papermaster, who is a microchip designer by trade, would head up Apple's devices and hardware engineering efforts. Now, for a company that buoys itself on software and physical design more than anything, its hardware design efforts always seem to get left behind. One quick peek at the MacBook Air's design engineering, though, and it's pretty easy to see that Apple's finesses does not rest solely with software and user interface.

But in hiring Papermaster, U.S. District Court Judge Kenneth Karas didn't like what he saw from Apple's end. So much that he ruled Papermaster must "immediately cease his employment with Apple Inc. until further Order of this Court." Okay then, the question is why. What could Karas care about here? Apparently, IBM's lawyers want to fine-tooth-comb Papermaster's non-compete employment contract with his former employer to make sure there are no conflicts of interest. Perhaps IBM is afraid Apple will start offering business services to large companies using huge mainframe servers or something. You know, since it's so weak in the consumer market.

IBM stated that Papermaster "is in possession of significant and highly-confidential IBM trade secrets and know how, as well as highly sensitive information regarding business strategy and long-term opportunities." But the question remains -- does IBM really compete with Apple at all? These non-compete clauses are to protect the interests of companies that invest in senior employees from joining the competition and possibly divulging trade secrets at the same time. It's hard to see how IBM could have a problem with Apple's hire here, but I'm sure those Harvard law grads will get out the rulers and dictionaries for this one to try and find a reason. As we all know, there is no black and white -- only gray.

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Last updated: February 11, 2012: 09:21 AM

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