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The Courts Businesses Apple

Apple Lawsuit Tests If An Employee Can Plan Rival Startup While On Payroll (reuters.com) 63

Posted by BeauHD from the lawsuits-with-big-implications dept.
Attorneys for a former Apple executive will try to convince a skeptical judge that employees can plan a competing venture while still in a job. Reuters reports: Apple filed the lawsuit in Santa Clara County Superior Court against Gerard Williams III, who left the company last year after more than nine years as chief architect for the custom processors that power iPhones and iPads to start Nuvia Inc, which is designing chips for servers. Judge Mark H. Pierce last week issued a tentative ruling allowing the case to proceed but barring Apple from seeking punitive damages.

Apple sued Williams in August, alleging that he breached an intellectual property agreement and a duty of loyalty to the company by planning his new startup while on company time at Apple, spending hours on the phone with colleagues who eventually joined the venture. Apple is not suing Nuvia itself or any of Williams' co-founders and it did not allege any intellectual property or trade secret theft. According to a copy of Williams' agreement that Apple attached to its complaint, the contract required that Williams "will not plan or engage in any other employment" that competes with Apple or is directly related to the company. In a filing in November, Williams argued that Apple's contract was unenforceable because California law allows employees to make some preparations to compete while still in their current job.
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Apple Lawsuit Tests If An Employee Can Plan Rival Startup While On Payroll More

Apple Lawsuit Tests If An Employee Can Plan Rival Startup While On Payroll

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  • What is company time and do OT rules make 24/7 (Score:4, Insightful)

    by Joe_Dragon ( 2206452 ) on Thursday January 23, 2020 @05:51PM (#59649394)

    What is company time and do OT rules make 24/7 company time = $$$$$ OT PAY?

    • Down vote this retard, what the fuck does that even mean?

      • Re: (Score:2)

        by rtb61 ( 674572 )

        Company time is not your time the company owns. It is a contractual arrangement to work for them and you are doing so, idle time at work, are you not allowed to breathe company air, the air in their offices. They pay you to do a job, they do not own you, don't do the job, they fire you, they can not sue you because that would be to claim they own every second of your time. Any idle time and what, your cheating the company, that is insane and what you choose to do in idle time is your choice. You are paid to

    • It's defined in California law, which also makes Apples no-compete clause invalid. Though I'd wager they could go after wages for the time spent I bet they'd spent 100X what they could recover in legal fees, all rather stupid. This suit sounds like someone like Tim Cook was personally offended he left and wanted to get pay-back.

    • This is about exempt employees, so there is no concept of hours worked. It is a little tricky when you are in a position of inventing, as your mind doesn’t just shut off when you leave the office.

      As for planning your next startup while on payroll, there are rational limits. Spending four hours a day during business hours for months trying to line up investors and/or clients clearly crosses that line. If your supervisor (and up the chain) is aware and supportive it is a little different, but it needs

      • I mean, if you spend four hours a day working on lining up investors and/or clients as an exempt employee, I'd imagine the two options are to claim it's work-product for your employer or to fire your ass. Those are the options.

        This seems to be suing for breach of contract, which is about the non-compete. AFAIK, those are illegal in California.

        • Re: (Score:2)

          by tlhIngan ( 30335 )

          This seems to be suing for breach of contract, which is about the non-compete. AFAIK, those are illegal in California.

          Not necessarily. There's a general set of worker protection laws for people like you and I, and there are different laws for people who are in the executive suites. It's a matter of power - you and I can't negotiate our employment terms - we get interviewed, hired, and sign the contract. We can make minor adjustments, but we can't outright change the terms blatantly. Thus the laws protect wo

          • My understanding was that non-competes in California applied to people whose company got bought if they had more stock than X%, and only then. But my quick search was unable to find the law.

      • Isnâ(TM)t he leaving to start a company designing ARM-based SoCs, just like he did at Apple?

        I know a non-compete canâ(TM)t be designed to prevent you from finding a similar job; but this sure seems like he is setting up a shop to apply his skills to develop ARM-based SoCs that he wil no doubt shop to Android OEMs. And didnâ(TM)t he do recruiting of coworkers while still on Appleâ(TM)s payroll?

  • and it's not using the company's IP, it should be fair game.

    • Not only that, but does planning to do something actually cause any harm until you actually execute on it?

    • Re:If it's not on company time (Score:4, Interesting)

      by bobbied ( 2522392 ) on Thursday January 23, 2020 @06:01PM (#59649446)

      Yep... That "salary exempt" status makes it really hard to know who's time is who's so good luck proving that the phone call was company time...

      I would add one thing though, don't use company resources (phone, internet, E-mail) either, unless their policy clearly says personal use is allowed in some way. Apart from that? Fair game.

      • I cannot agree enough about avoiding use of company resources. Even if it's "Guest WiFi", steer clear. People who want to prevent a person who did nothing wrong or illegal from being successful, clearly don't care much for morality.

        It's wonderful having affordable network service from phones as hotspots, and even a car can be a functional office to get off of company resources like network and prevent people from thinking you are using time paid for by employer X to consult with client Y

      • good add-on, I totally agree, don't use any company resources

    • Re:If it's not on company time (Score:5, Interesting)

      by Anubis IV ( 1279820 ) on Thursday January 23, 2020 @06:20PM (#59649516)

      From the summary:

      Apple sued [him for] planning his new startup while on company time at Apple, spending hours on the phone with colleagues who eventually joined the venture

      Emphasis mine, but it sure sounds like your subject line doesn't apply here, given that he is alleged to have been recruiting on Apple's dime. And while he may not have used company IP, the judge's comments make it sound like he did use other company resources, which could be just as problematic. Not only that, but they even have text messages from him [macrumors.com] saying that Apple would have "no choice but to purchase" his company, so he definitely knew that he'd be competing with them.

      • What's company time for a salaried employee?

        • right - no such thing as 'company time' when we are all expected to check email in the AM before work, in the late PM before bed, on weekends and often during lunchtime.

          there IS no such thing as 'company time' anymore.

          in a way, this is a tasty treat; apple has no leg to stand on and its the big corps like apple that FOUGHT to get us all 'exempt' (which means we can be abused to work long hours for NO extra pay).

          well, its funy to say FUCK YOU APPLE. you have zero legs to stand on, here.

          when companies start

      • Re: (Score:2)

        by ediron2 ( 246908 )

        It's not just time-of-day and salary that has become a grey area of '(ab)use of company resources'.

        I'll bet a nickel he used his cellphone and a non-work email address. At that point the 'use of other company resources' becomes flimsy.

        Meanwhile, Apple and half of silicon valley exists because engineers saw niches and spun off. They used company resources. They sometimes approached their company with proposals to spin up a product and were rejected, but nowadays they leave the company. The enthusiastic cr

  • Interesting Test (Score:3)

    by bobbied ( 2522392 ) on Thursday January 23, 2020 @05:54PM (#59649420)

    This will be an interesting test of California's rules on non-competes.

    Do they apply DRUING your employment term? Do you owe your employer your loyalty at all times, even when off duty? Is a paycheck enough to prevent you from working on your next gig, even on your own time?

    IMHO - There are SOME limits here, you are being paid to do a job, you owe them that, so no outside interests during work time... However, if you are salary exempt and are getting your assigned tasks done, who's to say what time is yours and what time belongs to the company? That sward cuts both ways if you ask me.

    • Do they apply DRUING your employment term?

      Is your left side going limp? Are you having a stroke?

    • Re: (Score:3)

      by dgatwood ( 11270 )

      IMHO - There are SOME limits here, you are being paid to do a job, you owe them that, so no outside interests during work time... However, if you are salary exempt and are getting your assigned tasks done, who's to say what time is yours and what time belongs to the company? That sward cuts both ways if you ask me.

      I wouldn't even go so far as to say "no outside interests during work time". If a company wants to have strict hours that are classified as business hours, fine, but they can't expect people to w

      • Non-compete clauses are quite often struck down as unenforceable when they get to the courts. IMO, it's with good reason, because today's business world is rarely much like the one my grandfather dealt with. The idea you owe a business your "loyalty" is a bit outdated, when they can let you go any time without even giving a reason in many states in the U.S.

        All you really "owe" the company is the work they're paying you to get done for them. Almost anyone I know who ever had to sign a non-compete was getti

        • Re: (Score:2)

          by mark-t ( 151149 )

          If you don't agree with a noncompete, don't sign one.

          Because during your employment, at least if what I have personally seen is any indication, they are quite enforceable.

          It's only after they stop paying you that noncompetes become more questionable. In many jurisdictions, an employer doesn't get to stop you from pursuing your livelihood. If they get to tell you that you can't work for a competitor, then obviously they need to be paying you a full time salary.

          To that end, the salaries in such pos

          • The problem is, I've seen a lot of people whip out a non-compete form they expect you to sign, after you're over half way through filling out the new hire paperwork. At this point, you already accepted the job. Being perceived as "difficult" by refusing to sign it is a pretty sure way to either be told you're "done here" before you ever get started -- or at least is a mark against them keeping you on past the probationary first 90 days.

            I don't know about you? But I've had a difficult enough time going thro

            • Re: (Score:2)

              by mark-t ( 151149 )

              I don't know about you? But I've had a difficult enough time going through months of unemployment

              Under no circumstances that I am aware of is a noncompete clause permitted to prevent you from obtaining future full time work in your chosen profession simply because your employment contract with one employer happens to end, unless the company is continuing to pay you a full time salary. Clauses which might try to otherwise achieve this are not generally enforceable. You could, if you are feeling charitable

      • You can’t set hours for exempt employees, which is where it gets tricky. An employer has to put trust in an exempt employee to get their job done; a non-exempt employee is simply paid for their hours worked, independent of their level of productivity.

        If you are using no company resources and create no conflicts of interest then all is clear. Once you start recruiting from your employer on paid time, or contacting common suppliers, you cross a line IMO.

        Generally though the only recourse is firing someo

        • Re: (Score:2)

          by Cederic ( 9623 )

          You canâ(TM)t set hours for exempt employees

          Why not? He had a contract, surely that stipulated the standard working week.

          My employment contracts do. They say things like "35 hours a week" and "Core hours are 10am to 4pm" and "by 35 hours we do of course mean anything up to and occasionally beyond 85 hours".

          Ok, that last one is unstated.

          • Not in California for sure; that could trigger you being classified as a non-exempt employee and eligible for OT. You can indicate that office hours are 9AM-5PM M-F, but you cannot dictate the hours that work is performed or penalize someone for not working a certain number of hours.

            We paid a straight-rate incentive for engineers when they worked overtime. Labor court decided that since we paid overtime the employee was non-exempt and we owed back wages, despite specifically qualifying as an exempt employ

    • Re: (Score:3)

      by tsqr ( 808554 )

      Read TFS, for cryin' out loud. He did it on COMPANY TIME using COMPANY RESOURCES. There's plenty of establised case law covering this sort of thing. If Apple can prove their allegations, he's a dead duck.

      • Read TFS, for cryin' out loud. He did it on COMPANY TIME using COMPANY RESOURCES. There's plenty of establised case law covering this sort of thing. If Apple can prove their allegations, he's a dead duck.

        The problem is "salary exempt" means you don't get paid by the hour or even for specific hours during the week. How do you determine what "company time" is and when "personal time is"? There is no clear bright line if you are getting a salary and are not paid by the hour, and lawyers LOVE to use grey areas to argue in court. I don't think Apple will prevail on the "it was company time" argument..

        Your "company resources" argument though IS a possible problem and a way Apple may get it's pound of flesh her

        • The problem is "salary exempt"[...]

          No. You are thinking like an employee.

          The person under discussion was an executive. An officer of the company. At his level, the discussion becomes about exercising proper duty-of-care to the company and shareholders. There is a contractual obligation to act in the best interest of the company.

          • The problem is "salary exempt"[...]

            No. You are thinking like an employee.

            The person under discussion was an executive. An officer of the company. At his level, the discussion becomes about exercising proper duty-of-care to the company and shareholders. There is a contractual obligation to act in the best interest of the company.

            It gets even more muddled then. IF he was a contract employee and not just salary exempt... THEN the content of his contract should govern the relationship. But, I'm going to have to see that contract at this point to make any legal arguments, as would you. But hey, it doesn't matter now.. I'm not a lawyer, I don't play one on TV and I didn't stay at a Holiday Inn Express last night, but neither is this true of you..

            So IF you are salary exempt and are reading this, I have two words of advice. Before yo

    • Define "work time" for an executive level position who's on salary. And after you do that think of all the exceptions your definition will need.

  • Apple sued Williams in August, alleging that he breached an intellectual property agreement and a duty of loyalty to the company by planning his new startup while on company time at Apple, spending hours on the phone with colleagues who eventually joined the venture.

    'Duty of loyalty to the company'??? That ship sailed looooong ago. And where is ANY legal requirement for 'loyalty'? That part of the lawsuit should be thrown out immediately. Ridiculous. And he's free to talk to his colleagues about future opportunities. Throw that part out of court as well.

    However, breach of intellectual property agreement is fine to settle in court. Unless...

    and it did not allege any intellectual property or trade secret theft.

    Huh? Is there or isn't there intellectual property theft?

    the contract required that Williams "will not plan or engage in any other employment" that competes with Apple or is directly related to the company.

    Wait, are we talking about intellectual property or non-compete?

    • "Duty of Loyalty" is likely a legal term that means something completely different than the normal definition of those words. Without knowing what those words mean in case law you can't even discuss it.

    • Duty of Loyalty is a legal term that means that corporate officers have to make their official decisions in the best interests of the company and not in their personal best interests; specifically calling out self-dealing or taking a corporate opportunity. No giving sweetheart 10billion USD contracts to the CEO's son or personally buying an underpriced piece of real estate that someone offered to sell your company. It's actionable.

      Even Enron's corporate officers involved in the got waivers from theself-de

      • It's not just officers. The duty of loyalty is a feature of agency law that applies to employees generally, typically implicated when employees are transacting on behalf of the company or are involved with transactions that would implicate company interests. The latter is probably what's gonna nail this guy in his coffin.

    • Re: (Score:2)

      by tsqr ( 808554 )

      'Duty of loyalty to the company'??? That ship sailed looooong ago. And where is ANY legal requirement for 'loyalty'? That part of the lawsuit should be thrown out immediately. Ridiculous. And he's free to talk to his colleagues about future opportunities. Throw that part out of court as well.

      This thread is a couple of days old, but I stumbled across this while researching a different subject, and perhaps foolishly, I thought it might be of interest to you. Or, depending on how entrenched your personal beliefs are, maybe not.

      California has codified the “duty of loyalty” in Labor Code sections 2860 and 2863. An employee is obligated to give preference to the business of the employer when conducting any business on his or her own that is similar to the employer’s business. More

  • I remember some years back when an Apple engineer programmed a Netflix DVD subscription management app for the Mac (yeah, that long ago) on his own time, and was forced to give it up because Apple objected (can't remember the app name now).

    And these days, anyone "scooped up" by Apple seems to typically "disappear" from public view (Guy English which had the Debug podcast [imore.com] comes to mind), as if once hired by Apple they're not allowed to have a public voice anymore.

    I sure hope they get paid 3x normal going sal

  • Employers invest in employees and vice versa. There should be some reasonable restrictions on exploitation on both sides. This is a good case. The guy who invented LED was given squat by his employer at first coz well greed, yet they profited. He got some more money later. Employees steal too so courts need to intervene and decide where unclear.

  • The crux. (Score:3)

    by Oligonicella ( 659917 ) on Thursday January 23, 2020 @11:27PM (#59650556)
    "while on company time at Apple"

    • Re: (Score:1)

      by t0rkm3 ( 666910 )

      As a salaryman, what time isn't company time?

      Supposedly, any time that you are not working on a company project. So, who gives a shit what time of day it is? Or do you mean to say that a salaried employee works extra hours when required by a project but has no ability to flex the hours in the other direction when they do not have a pressing deadline?

      As long as this guy was salaried and meeting or exceeding expectations from his management chainthe 'on company time' argument should be invalid.

  • "California law * allow* employees to make some preparations to compete while still in their current job."

    How magnanimous of the State of California to allow employees anything at all... As if government should consider itself our master.

    This is where things incline towards the wrong. Government claiming the right to permit you to do what you want, without clear reason and hopefully benefit, as if we answer to our government. And in California, where they can't seem to ensure property owners the quiet enjoy

  • WTF (Score:2)

    by Holi ( 250190 )
    What the hell is a "duty of loyalty to the company"? How is that a legal requirement?

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