Steve Jobs threatened Palm with a patent lawsuit should employee poaching continue | webOS Nation
 
 

Steve Jobs threatened Palm with a patent lawsuit should employee poaching continue 17

by Derek Kessler Wed, 23 Jan 2013 7:23 pm EST

Steve Jobs threatened Palm with a patent lawsuit should employee poaching contin

It's not news that late Apple co-founder and CEO Steve Jobs approached former Palm CEO Ed Colligan to instate a no-poaching agreement between the two companies. And it's no secret that Colligan rebuffed the overture, stating in an email to Jobs that such an agreement was "likely illegal". As issue was Palm's active recruiting of then-current Apple employees; Apple had "gentlemen's deals" to squash cross-company recruitment with other Silicon Valley giants like Intel and Google. Even though Palm was small, under then-Chairman Job Rubinstein they were aggressively courting Apple employees to join the webOS project - this is back in August of 2007, over a year before webOS and the Palm Pre were unveiled to the world.

What we didn't know was that Jobs had threatened Palm with a patent lawsuit should they not stop attempting to poach employees. Said Colligan in an email response to Jobs: "This is a small space, and it's inevitable that we will bump into each other. Threatening Palm with a patent lawsuit in response to a decision by one employee to leave Apple is just out of line. A lawsuit would not serve either of our interests, and will not stop employees from migrating between our companies. This is a very exciting time for both of our companies, and the market is certainly big enough for both of us. We should focus on our respective businesses and not create unnecessary distractions."

And then, Colligan lays out a polite 'bring it on, Steve': "That said, I want to be clear that we are not intimidated by your threat. Palm has a very robust portfolio of patents, having been in the handheld and smartphone businesses since the early 90's… If you choose the litigation route, we can respond with our own claims based on these patent assests, but I don't think litigation is the answer. We will both just end up paying a lot of lawyers a lot of money."

To which Jobs responded, "I'm sure you must realize the asymmetry in the financial resources of our respective companies."

In the end, neither company saw each other in court, be it over patents or not. As Colligan said in his email to Jobs, as far as he was aware, Palm had only picked off three Apple employees, while Apple had "hired at least 2% of Palm's workforce." Also, there's the matter of how well Apple would fare in patent battle with Palm, the company that holds Patent #7555727 "Integrated handheld computing and telephony system and services". Yep, that's the fancy way of saying "smartphone".

And there's the question of how much benefit there would be in it for Apple; Palm wasn't exactly rolling in cash. A victory over Palm would have been largely symbolic for Apple, and given Palm's extensive patent portfolio, it would have been risky for Apple to go after. All of those patents now belong to HP, and they're doing just about diddly-squat with them.

Apple, Google, Adobe, Intel, Intuit, and Pixar all settled their anti-poaching agreement cases with the US Department of Justice in 2010, avoiding any prosecution over their alleged wrongdoings. This new information has come to light as part of a civil suit filed against Apple, Google, and Intel by five employees, alleging that the agreements potentially resulted in missed job opportunities, lower wages, and decreased negotiating leverage.

For the part of the defendants in the case, today's releases don't look good. Not only was Apple explicitly called out by Colligan's submitted evidence, Google chairman Eric Schmidt (then CEO) was caught emailing "I don't want to create a paper trail over which we can be sued later" (oops) and Intel CEO Paul Otellini stated that he didn't want his anti-poaching agreement with Google to be "broadly known".
Not good for them. And good for Palm (not that it did them much good in the end). But hey, Ed Colligan, you can hold your head high for standing up for Palm and standing up for employee rights. And the whole webOS thing too.

Source: Reuters; Scribd

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17 Comments

I like to imagine that had Steve and Ed driven the five miles between Maude Ave and Infinite Loop, the conversation would have gone something like this...

"Look, Ed, I just want you to stop hiring away my employees. I knew when you dragged Jon out of retirement you were gunning for something big, but stealing my guys? That's just wrong."

"Steve, it's just business. I want the best people, you want the best people."

"I want you to stop hiring my best people."

"Not gonna happen, man."

"I'll stop hiring yours. Deal?"

"Pretty sure that's illegal. We could get sued."

"Dude, nobody has to know."

"I don't care, it's not right."

"Do you think whether or not something is <airquotes>right</airquotes> really matters to me? I'm Steve Jobs!"

"Yes, you are Steve Jobs. And I don't care whether or not it matters to you."

"Look, if you won't agree to this, I'll have to consider a patent suit."

"Really?"

"Yeah, really."

"You want to go there?"

"Yeah, I want to go there. I suggest you take a look at our patent portfolio before you decline my offer again."

<laughter>

"What?"

"Have... have you looked at Palm's patent portfolio? We've been at this for fifteen years. We own the patent of smartphone!"

"Whatever."

"Look, Steve, I'm sorry Palm hurt your feelings by hiring away three of your guys. I tell you what, I'll let you hire some Palm employees inst- oh, right, you already hired twenty of my guys. Get over yourself."

"Schmidty never talked to me like that..."

The article gave me chills, this though made me laugh so much. Thanks for the read :)

I just picture picture Steve Jobs breaking something after the smartphone patent comeback.

LOL...great stuff Derek!

Hey - does anyone have any Hollywood connections? Is it too late to get this scene into the movie? :)

OK, nowhere in the email traffic was that worthless smartphone Patent #7555727 brought up. And Derek sloppy reporting on your part to ignore what Steve Jobs said about the patents. Here is what he said...

"Just for the record, when Siemens sold their handset business to BenQ they didn't sell them their essential patents but rather just gave them a license. The patents they did sell to BenQ are not that great. We looked at them ourselves when they were for sale. I guess you guys felt differently and bought them. We are not concerned about them at all. My advice is to take a look at our patent portfolio before you make a final decision here.

Steve"

http://www.theverge.com/2013/1/23/3906310/the-no-hire-paper-trail-steve-...

That's what was said in the email. I don't understand why you and others keep talking about that worthless smartphone patent that Palm and now HP holds. It's WORTHLESS. Or, did you forget that HP tried and failed in trying to offload Palm and that so-called valuable patent to another buyer.

Nobody was willing to pay the price that HP was demanding.

http://www.webosnation.com/hp-wanted-1-2-billion-webos-well-isn-t-nice#c...

Just because it didn't sell doesn't mean there aren't companies that would have wanted to buy it. Just not for how much HP wanted.

I bring up patents like #7555727 as evidence of the foundational nature of the Palm patent portfolio.

I'm sure that Samsung or Apple would gladly pay just about any amount of money for that patent just to stop all the lawsuits, alone.

Just think of all the money they spend in lawyer fees. Not to mention all the meetings, time spent, the negative publicity in the media of them suing each other. If either one of them could buy just one patent that would make all of that go away, they would.

The fact that they didn't buy Palm from HP is not because HP was asking for too much, but because they know that OLD patent from back then is not relevant in today's market. In other words it's worthless to them and just about everyone else.

Microsoft collects royalties from over half of all Android devices sold...

http://www.techspot.com/news/45985-microsoft-collects-royalties-from-ove...

Why isn't HP out collecting a few dollars from every smartphone that is made today? Are they that stupid to leave money on the table, or is it because they know that smartphone patent is worthless?

You do realize that Palm has many more patents than that. The problem is, everyone here reads the wrong parts of the patent and make really bad conclusions. However, given that Palm sought to protect their products years before Apple thought of phones, there are many Treo patents, when smartphones weren't around, that have very broad claims which I can bet Apple does infringe on. Although I'm sure Apple does have patents for their old Newton, those probably were expired, whereas many of Palm handheld patents were still valid at that point in time. So in the end, Palm's portfolio would have trumped Apple's easily. Now, the only reason why no one wanted to buy Palm's patent portfolio is because for the money you spend, you get only a very short period of protection, as many of those patents will be expiring this decade. 1.2 billion to get protected for 5 years isn't really worth it. And for the ones that don't expire this decade, the money spent wasn't worth it (especially since no one really spends that kind of case for patents only). Again, here is a case were Jobs, ignorant to everything but his own reality, can't come to grips that a company, for over 5 years (since the first Treo and even beforehand, with the old Springboard modules) were making and patenting this technology before Jobs became CEO. In no way would Apple's patents, which came later and have much more narrow claims, can trump Palm's which due to the time they were applied for, have very broad claims. To see this in action, check out Nokia's recent win against RIM. Also, Palm's lawyers were able to overturn the ruling against them in the Xerox case, despite Palm actually being in the wrong, so Palm does have the right law firm representing them. Apple's on the other hand, was quite lucky with the judge in their Samsung suit.

So Stevey wasn't just ticked at Google. Really hope HP never sells the Smartphone patent to Apple. Afraid Infinite Loop would sue to stop all Smartphones... a boring one-size-fits-all, cookie-cutter world.

Mr Kessler,

Are you implying a strategy to get new webOS hardware?

A) HP uses the 'smartphone' patent to sue Apple (and any other manufacturers it feels like), easily winning due to the watertight nature of the patent.

B) Takes over the iphone business (or a sum of money large enough to massively invest in smartphones again).

C) Installs webOS on iphone 6 AND ALL OTHER SMARTPHONES!!!!

D) World Domination.

;-)

+1

1. Sue every smartphone maker with that patent.
2. ???????
3. Profit.

Derek, you should right a history of palm and webos book, or we should just produce a tv show. It would be like Pretty little Liar but with tech.

+1
+1
+1...

.

In light of all things Palm - and now HP - one has to wonder why HP doesn't use their strengths (ie. Patents) to their advantage. They're still a big company, despite the Billion dollar write-downs, and employee reductions.

No doubt ... HP has their issues. But they are not vulnerable like RIM is - with all the marbles on BB10. The PC business may be "decelerating", while the tablets/mobile side is "accelerating", however, the PC market is STILL expected to increase (4th Q - 2013 being the exception).

Tablet - PC Sales Forecast

As well, HP maintained top market share in the PC side of things, although Lenovo closed the gap.

HP Holds Onto Top Spot

What I continue to wonder - with all the doom and gloom relative to webOS - is the "sequestered" reality that exists for HP, and their assets relative to the Palm acquisition, as well as post-Palm development. As such, HP has:

1) Countless patents (as per Derek's link)

HP/Palm Patent Porfolio

2) Hardware patents that include (and I'll probably miss a few):
- Palm Pixi, Pre, Pre 2, Pre 3, Veer, (Pre 4 ??), WindsorNot
- Touchpad, Touchpad Go, Touchpad 2 ???

As some point, these "assets" should be able to translate into contingency value - future phones & tablets - relative to webOS. The value has to be worth something, even though HP "cleaned" the Palm purchase off its' books. Clearing this asset strikes me as more "wiping the slate" - no pun intended - allowing HP to reboot their presense in this "other" growing market.

.

Oh, well... this "funnyboys" from other SO are so boring... :-/

Best Regards... B)

So sad that Palm had the chance to become such a big force on phones and tablets. If onlu webOS was out even a year earlier it would be the top OS today.

As far as Apple? I still thing
k their operating system sucks!

"likely illegal", yeah, right.

This kind of thing happened to me twice, though it's "likely illegal" in Germany, too.

The basic idea is to "increase the effort" one company has if it hires employees from business rivals. The only thing you have to do is producing the average cost of said employee of maybe one year by lawsuits, absence of witnesses, in general generating unproductive time and no rival company might hire you at least for a while.