IBM was dealt a legal setback on Friday in its effort to prevent an ex-exec from taking a position at rival Dell. David Johnson, the former senior executive in charge of IBM's merger, acquisition, and divestiture strategy, was offered a similar job at Dell back in May, but Big Blue sued to stop Johnson from taking the job. And …
Not really surprised
Non-compete agreements are rarely held to be valid as they restrict employment. This one also sounded as though it were worded in a format which prevented him working anywhere in the world, which is generally another no-no. The only way they can be reasonably enforced is if he was being paid "gardening leave" money as compensation.
"...agreement he was being forced to sign, he signed the form in the wrong place and reasonably believed (and still believes) that it has not been in effect all these years..."
What !? Can you do this and it stands up in court?
(When I signed the bank loan agreement, I signed it in the wrong place so I don't need to repay it, etc, etc)
What do they do?
What does IBM actually do? They have flogged the PC business (which it invented,) to Lenovo. I've seen loads of IBM office's closed in the UK.
So what do IBM actually do these days, apart from resting on the Laurel's of its patents?
Re: Not really surprised
I wonder if IBM has a case if they take the tack that the (presumably high) historical remuneration was based on an agreement not to compete and then try and sue for a large chunk of historical pay as recompense.
You wrote:"Non-compete agreements are rarely held to be valid as they restrict employment."
This is patently false.
The correct answer is: "It depends.".
Non compete contracts do hold water if written properly. If they are overly broad, and they restrict you from working in your field of expertise, then yes, they are unenforceable. However, if they are written correctly and limit your ability to go to work for a competitor for a reasonable period of time, then they are enforceable.
An example... Doctors routinely sign non-compete agreements that prohibit them from starting a competing group within an XX mile radius of their current group, within a year's time. Trust me, this type of contract has been enforced.
Without seeing the contract, its impossible to know how enforceable the contract is.
If IBM specifically listed Dell and/or other competitors, then it could have been enforceable were IBM to have correctly plead their case. They lost because they didn't outline what he could have known that would have been interpreted as 'trade secrets'.
The litmus test would be to see if the contract would have allowed him to work for any tech company in an M&A position. If it named Dell, Apple, Oracle, and Microsoft but didn't name Cisco, Seagate, SAP, Intel, HP, etc ... then it would probably have been enforceable. Also it would only have applied if his job title/responsibility had been the same. Had he joined the company as their CFO, then again probably it would not have been.
With respect to the new allegation, its an interesting one. IBM frowns on its employees starting a side business in a similar field. So a techie couldn't do a side job as a consultant. He could however start a business as an owner of apartments for rent. (I know of a couple of IBMers who have done this.)
All in all, I do think IBM is actually scared about his departure.
Non Compete Documents
I will not guess about the IBM/Dell issue per se but my last employer took this(non compete) seriously and was rabid about this and they made sure that you understood it as it was repeated quarterly in staff meetings.
The jerks (employer) went out of their way to screw employees and they got what they deserved finally was to be bought by another bank *AND* out sourced to India. The way they treated their employees was a utter disgrace they basically said they would sue you fir anything they could. They got zero employee points for good/bad employer.
They got what deserved. Hope the VP's and below never find another job in the US.
Yep! Garden leave would have been a better solution
And a lot cheaper and no lawers needed.
Just pay him to stay at home until his knowledge is out of date.
What - no contract
"Johnson explained in his filings that when he was disgruntled with Big Blue about the non-compete agreement he was being forced to sign, he signed the form in the wrong place and reasonably believed (and still believes) that it has not been in effect all these years."
Was there a meeting of minds? Was there a contract?
If not, will Johnson repay all he was repaid under the non-contract?
I routinely sign documents, that I wish to contest at a later date, as mickey mouse, or some other fictional character. Although it has never come to that, I would just love to see one of them make it into a court case ;)
I'd be impressed if he "accidentally" managed to take a stapler home. IBM doesn't have any !