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Non-Competes and Trade Secrets - IBM Loses a Case

I am not so sure that I buy not signing on the correct line means that the non-compete agreement in Judge: Former IBM executive can work at Dell is enough. I am more worried about the implication that IBM had an employee sign a non-compete after the start of employment.

According to a court document, IBM in 2005 required executives to sign noncompete agreements to continue receiving equity benefits. Johnson didn't agree with certain conditions in the noncompete agreement, so he signed the document on the wrong line. Johnson said that IBM discovered that the signature wasn't properly executed and sent him a new noncompete agreement, which he never signed.

In a court filing, IBM alleged that Johnson had indeed signed a noncompetition agreement. However, the court said that IBM's case wasn't strong enough and that its actions raised significant doubts as to whether Johnson had entered into the noncompete agreement.

Frankly, this argument from the employee from Reuters' IBM loses injunction against Dell executive better explains what went wrong at IBM:

He maintains that the non-compete agreement is invalid because he intentionally signed his name in "the wrong spot" on the document in a bid to win time to work out his differences with his superiors.

"I believed that IBM did not consider the non-compete agreement agreed upon or entered because IBM returned to me the one I had signed in the wrong spot unexecuted and asked me to sign a new form," Johnson said in an affidavit.

I find the trade secrets issues even more interesting:

The judge also said that Johnson didn't have access to IBM trade secrets. "The Court ... believes that IBM has overstated its case. Mr. Johnson does not have the sort of information that is considered quintessential trade secret information--detailed technical know-how, formulae, designs, or procedures," Robinson wrote. In addition, Johnson could suffer great hardship if the court enforced the agreement, the judge wrote.

Which is pretty straightforward trade secrets law, but IBM argues the employee possesses a different kind of information:

IBM argued that Johnson could hurt the company because he has knowledge of the "most sensitive confidential strategic information," according to the filing.

I am trying to figure out what strategic information could be confidential. Client lists....but we are talking about IBM here. Those likely to be IBM clients are what I would call obvious and not a secret.

If I can find the time, I might jump on Pacer and see what else there is to find out.

Full post as published by Indiana Civil & Business Lawyer on July 01, 2009 (boomark / email).