Apple Computer Inc. v. Steven Jobs.
The lawsuit has an odd ring to it -- Apple suing its famous founder, who is starting another company. Apple alleges Jobs stole trade secrets and breached his fiduciary duty to the company. But the kind of hurricane swirling around Jobs arrives more frequently now than even radar could track. With companies eager to sue departing employees, experts fear innovation could wither.
"There's definitely more litigation these days," says Robert Birnbaum, a Boston attorney who specializes in high technology. The list of companies that have won court orders restraining former employees from competing includes American Can, IBM, and Union Carbide. Most cases go unreported, settled out of court.
Not all suits involve technology companies. Peggy Lawton Kitchens Inc. got a court order preventing an employee from using a secret cookie recipe in a new business, and Maritime Fish Co., of New York, persuaded a court to close down a company started by a former employee.
Cases are mounting for several reasons. With research and development costs rising and technology becoming more competitive, companies are determined to protect their interests. Also, trade-secrets law has matured. "There was a great disinclination to prosecute," says Robert Alan Spanner, a Palo Alto, Calif., lawyer and author of the book Who Owns Innovation? "The pendulum in very short order has swung to the other side." Now, companies aren't above suing even if the employee's idea is original.
The new wave of litigation may chill innovation and reduce start-ups. In one case, two engineers obtained a commitment for capital to start a computer-equipment company. Because of indications that their former employer might sue, the venture capitalists withdrew funding, forcing the engineers to remain at their old jobs.
Employees with original ideas may be deterred from striking out on their own. "Not only are start-ups threatened, but every key employee who proved to be a competitor could face an expensive lawsuit," says Spanner. "It makes the risk of starting a company, which is already high, even graver.And it makes attracting capital even tougher."