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CNET News/Industry Standard: Noncompete Clauses Can Keep Tech in Check

New York partner John Siegal was quoted in a November 18 CNET News article, "Noncompete Clauses Can Keep Tech in Check." A portion of Mr. Siegal's remarks also appeared in a November 24 story published on "Industry Standard," a technology internet magazine.

The focus of the article is the case of Mark Papermaster, who is being sued by IBM for violating the terms of a noncompete agreement (signed in 2006), by accepting an offer to run Apple's iPhone group in October. Papermaster claims that since he'll be working on a product that does not compete with anything IBM offers, that agreement should not apply.

However, according to the article, the agreement he signed contains broad provisions regarding where and how he could seek employment for a year following his departure from the company, and it is very enforceable in New York, where IBM is based.

Said Siegal, "These cases are prosecuted as a deterrent to others. In case people are going to be following a high-level executive, (a company) is going to impose limitations to get the rest of the staff to think twice or three times (about leaving)."

According to the article, the central question surrounding Papermaster's noncompete is whether his activities at Apple would harm IBM. The court has to find that the noncompete is necessary to protect the interests of the employer.