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Judge orders IBM to pay $3M bond to keep Apple exec case going

It would covers costs or damages to Mark Papermaster if IBM's wrong

November 14, 2008 12:00 PM ET

Computerworld - A federal judge has ordered IBM, which is trying to block a former company executive from taking a job with Apple Inc., to provide a $3 million bond by the end of today to keep the case going.

In an order signed Wednesday, but posted to the federal court system's database only yesterday, U.S. District Court Judge Kenneth Karas instructed IBM that it must file the bond by 5 p.m. EST.

A week ago, Karas slapped a temporary injunction on Mark Papermaster, a 26-year veteran of IBM, that barred him from working at Apple. Papermaster, who was announced as Apple's new vice president of devices hardware engineering on Nov. 4, was told to "immediately cease his employment with Apple Inc. until further order." Karas has yet to issue an opinion to explain his reasons for that order.

The $3 million bond is designed to pay for any costs or damages that Papermaster might suffer if it's later determined that IBM wasn't entitled to an injunction.

Karas noted that district courts are allowed "wide discretion" in setting the bond's dollar figure, then added: "Based on a careful reading of the letters sent by the parties to the court, which are being filed under seal, the court finds that a bond in the amount of $3 million is appropriate to guarantee payment of the costs and damages that defendant may suffer, if the injunction should not have been issued."

IBM sued Papermaster on Oct. 22, claiming that a noncompetition agreement he signed in 2006 prevented him from working for competitors for a year after leaving the company. According to IBM, Papermaster had information of "highly confidential IBM trade secrets" that would "irreparably harm" the company if he was allowed to work for Apple.

Papermaster countered that "Apple and IBM are not even competitors," and he argued that the two companies target completely different markets -- Apple aiming its electronics at consumers, while IBM pitches its products to businesses.

The next item on the case's calendar is a status conference slated for next Tuesday in Karas' court in White Plains, N.Y.

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