Steve Jobs threatened Palm with patent suit, strictly enforced no-poaching policy

January 23, 2013

Apple co-founder Steve Jobs threatened its competitor Palm with patent litigation and financial ruin if it did not stop hiring employees away from Apple, according to newly unsealed court documents.

The e-mail and a statement from former Palm CEO Edward Colligan came to light as part of a civil antitrust case a former Lucasfilm employee and four others filed against Apple, Google, Intel, Adobe, Intuit, Lucasfilm and Pixar. The suit claims the companies conspired to drive down wages and competition by not hiring from each other.

Reuters reports the companies fought to keep these documents out of the public eye -- a battle illustrated by months of back-and-forth filings and discovery disputes. But the documents were unsealed on Tuesday.

“In August 2007, I received a call from Steve Jobs, the Chief Executive Officer at Apple,” begins part of Colligan’s statement. “On the call, Mr. Jobs expressed concern about employees being hired away from Apply by Palm. As a solution, Mr. Jobs proposed an arrangement between Palm and Apple by which neither company would hire the other’s employees …

“Mr. Jobs also suggested that if Palm did not agree to such an arrangement, Palm could face lawsuits alleging infringement of many of Apple’s patents.”

Unsealed e-mails suggest that after Colligan rejected the “arrangement,” Jobs repeated his threat.

“Your proposal … is not only wrong, it is likely illegal,” Colligan wrote to Jobs.

“This is not satisfactory to Apple,” Jobs fired back. “I’m sure you realize the asymmetry in the financial resources of our respective companies … My advice is to take a look at our patent portfolio before you make a final decision here.”

Colligan signs his e-mails “sincerely.” Jobs just writes “Steve.”

A 2006 e-mail from Jobs to Google chairman Eric Schmidt asks Schmidt to “put a stop” to recruiting from Apple’s iPod group. An internal e-mail from Schmidt to another executive warns her to leave no paper trail about the no-recruit practices, in case they get sued.

An Apple “do not call” list, unearthed by The Verge, lists 27 companies they will not recruit from, including Adobe, Google and Pixar. A similar list from Adobe includes Apple and Bell Canada.

Many of these companies have admitted to no-poaching practices before: In 2010, Google, Apple, Adobe, Intel, Intuit and Pixar agreed to a settlement that barred them from making future recruiting agreements.

The plaintiffs in this case are waiting to hear whether it can proceed as a class action suit, which increases their chances of scoring a big settlement.

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Caitlin Dewey runs The Intersect blog, writing about digital and Internet culture. Before joining the Post, she was an associate online editor at Kiplinger’s Personal Finance.
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