Ex-IBM Exec Papermaster To Join Apple As Lawsuit Settled

Papermaster, a 25-year veteran at IBM, will take over as the head of the iPod and iPhone division at Apple, replacing Tony Fadell. A statement on Apple's Web site said Papermaster will report directly to CEO Steve Jobs. However, Jobs recently took a medical leave of absence, and plans to return to the job in June.

Apple announced on Nov. 4 that Fadell was stepping down and that the company had tapped Papermaster to replace the outgoing executive. That same day it became public that IBM filed a lawsuit against Papermaster on Oct. 22 in the U.S. District Court in Manhattan, attempting to block Papermaster's move.

Papermaster had resigned from IBM the previous day, saying he was taking an unspecified job at Apple.

In the filing, IBM claimed that Papermaster was aware of "significant and highly confidential IBM trade secrets" could "irreparably harm" his former company if the move was allowed. Additionally, IBM claimed that Papermaster is in possession of significant and highly confidential trade secrets and know-how, as well as highly sensitive information regarding business strategy and long-term opportunities. The company would suffer irreparable harm if he failed to comply with the noncompetition and nonsolicitation covenants."

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In his own court filing, Papermaster argued that in his time at IBM, Apple was never described as a competitor, noting that IBM sold its personal computer division to Lenovo in 2004 for $1.75 billion.

"Blade servers are not a consumer product," Papermaster said in the filing in November. "To the best of my knowledge, IBM does not design, manufacture or market consumer electronic products."

On Nov. 11, U.S. Federal District Judge Kenneth Karas in Westchester, N.Y. handed down a preliminary injunction ordering Papermaster to "immediately cease" working for Apple. The rationale, according to Judge Karas, was that Papermaster had indeed violated IBM's noncompete contract.

A trial date was never set and not needed as IBM and Apple agreed to a settlement today allowing Papermaster to begin his job on April 24. Details of the settlement were not disclosed.