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