Papermaster Settlement: Apple Innovations May Require IBM's OK

Microchip expert Mark Papermaster has settled a noncompete lawsuit filed against him by former employer IBM and is set to join Apple on April 24 as head of device hardware engineering, Apple announced Tuesday.

The terms of the settlement, however, place a potentially heavy burden on Papermaster and, by extension, Apple. Papermaster must check in with IBM if he suspects that any innovations he develops at Apple infringe on confidential or proprietary information he picked up during his years of work at Big Blue.

"To the extent that Mr. Papermaster has a question as to whether any information he intends to or may disclose or otherwise use in any way is IBM confidential information Mr. Papermaster will raise such question with IBM before any disclosure or use of that information," Judge Kenneth Karas wrote in a consent order filed Tuesday in U.S. District Court in Manhattan.

What's more, the settlement dictates that IBM, and only IBM, gets to decide if the techniques in question derive from its intellectual property, and its decisions are not subject to appeal -- even to the court. IBM's determination "shall be final and binding and not subject to review in any way," Karas wrote.

Papermaster must also submit to IBM, on two occasions prior to Oct. 15, a declaration, written under penalty of perjury, that states that he's not using confidential IBM material in his role at Apple.

IBM and Apple compete in the market for components used in handheld devices such as mobile phones and MP3 players. Papermaster's position at Apple puts him directly in charge of development efforts for the iPhone and iPod handheld lines.

The unusual settlement comes at a time of uncertainty within Apple's upper management. CEO Steve Jobs announced earlier this month that he would take a six-month leave of absence in order to attend to his health. Jobs originally said that he was suffering from a hormonal imbalance but stated later that his condition is more complicated than first believed.

Jobs was treated for pancreatic cancer in 2004.

IBM sued Papermaster, who was part of Big Blue's elite Integration & Values team, for violating a noncompete agreement in October, shortly after he informed the company that he intended to join Apple.