Wednesday, January 23, 2013

The No-Hire Paper Trail

Jeff Blagdon:

Steve Jobs threatened patent litigation if Palm wouldn’t agree to stop hiring Apple employees, says former Palm CEO Edward Colligan in a statement dated August 7th, 2012. The allegation is backed up by a trove of recently-released evidence that shows just how deeply Silicon Valley’s no-hire agreements pervaded in the mid-2000s. Apple, Google, Intel, and others are the focus of a civil lawsuit into the “gentleman’s agreements,” in which affected employees are fighting for class action status and damages from resulting lost wages, potentially reaching into the hundreds of millions of dollars.

Colligan claims that Palm only hired three people from Apple, while Apple hired 2% of Palm’s employees.

While there are perhaps arguments to be made for the strategic benefits of these kinds of no-hire pacts, it’s obvious from the e-mails we’ve seen that high-ranking executives realized their potential legal ramifications. Above, Google’s Eric Schmidt notes that he doesn’t want to create a paper trail explicitly mentioning the agreements, lest the company “be sued later.” In a separate e-mail, Intel CEO Paul Otellini expresses his desire that the existence of the handshake agreements not be “broadly known.”

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