Judge Gives Apple An iPhone Headache

A US judge has given Apple a big headache after he ruled that Apple’s new boss of iPod and iPhone development devices must stop work immediately because he may have violated an agreement with IBM his former employer.

A US judge has given Apple a big headache after he ruled that  Apple’s boss of  iPod and iPhone development  devices must stop work immediately because he may have violated an agreement with IBM his former employer.

 IBM has claimed in its lawsuit that Papermaster, a 26-year company veteran, would use confidential information about IBM’s microchips and server technology in his position at Apple. Apple responded by claiming that he was working on totally different technology than what he worked on at IBM.

Mark Papermaster quit IBM for Apple in mid October with what IBM has described as a lot of IBM Company secrets. IBM hit back by  applying to the U.S. District Judge Kenneth Karas for a determination on Papermaster’s employment contract. IBM claimed  the move violated an employment contract in which he agreed not to work for a competitor within a year of leaving his job.

Papermaster has been ordered by Judge Karas to immediately cease his employment with Apple until further orders from the District Court. “We are gratified that the court agrees with our request,” said Fred McNeese, an IBM spokesman. “We will comply with the court’s order, but are confident that Mark Papermaster will be able to ultimately join Apple when this dust settles,” Apple spokesman Steve Dowling said.

According to Bloomberg, at Apple, Papermaster reported directly to Chief Executive Officer Steve Jobs and was responsible for developing the iPod and iPhone products, Papermaster’s attorney, Timothy Hardwicke said. “He’s got a once-in-a-lifetime job working directly with Steve Jobs,” Hardwicke said, adding that Papermaster would be “punished” if Karas stopped him from working at Apple. “IBM can’t survive if the know-how and information in the minds of people like Mark Papermaster go to a competitor,” IBM attorney Stephen Madsen told the judge.

IBM has said that Papermaster had access to confidential information including corporate strategy, business plans and marketing material. “Because of that access, IBM has to be able to protect itself from the risk that someone in Mark Papermaster’s position would take that information and export it elsewhere,” Madsen said.

Sales of the iPod have topped more than 174 million units, making it the best-selling digital music player in the U.S., according to market research firm NPD Group Inc.

Apple said it sold a record 6.89 million iPhones last quarter. After setting aside a subscription accounting standard, iPhone sales were about $4.6 billion, or 39 percent of Apple’s total business.