US Court Rejects IBM Appeal in Executive's Move to Dell

IDG News Service — A U.S. court has rejected an IBM appeal to bar David Johnson, the company's former chief of mergers and acquisitions, from working at rival Dell over concerns regarding trade secrets.

The U.S. Court of Appeals for the Second Circuit late Wednesday upheld a circuit court ruling from last week that allows Johnson to perform his full duties as senior vice president of strategy at Dell. Johnson worked at IBM for 27 years and directed the company's mergers and acquisitions strategy. He was hired by Dell in May.

In earlier court filings, IBM argued that Johnson could hurt the company because he had knowledge of the "most sensitive confidential strategic information." IBM accused Johnson of violating a noncompetition agreement after he joined Dell.

Judge Stephen Robinson of the U.S. District Court for the Southern District of New York last week ruled that IBM's case wasn't strong enough and questioned whether Johnson had entered into a such an agreement. Johnson did not possess "the sort of information that is considered quintessential trade secret information -- detailed technical know-how, formulae, designs, or procedures," Robinson said.

In 2005, IBM required executives to sign noncompetition agreements to continue receiving benefits. Johnson argued that he signed the document on the wrong line as a sign of disagreeing with certain conditions specified in the agreement. IBM then discovered that the signature wasn't properly executed and sent him a new noncompetition agreement, which he never signed, Johnson said. IBM alleged that Johnson had indeed signed the agreement.

IBM in early June won a ruling that allowed Johnson to begin limited work with Dell, but prohibited him from disclosing any confidential IBM information. Johnson was ordered then to keep a log of specific daily activities at Dell that could be supplied to IBM's lawyers on request.