Steve Jobs Used Patents Like A Mob Boss: Threatened To Sue Palm Over Patents If It Poached Any Apple Employees

from the they're-weapons dept

It’s long been clear to us that, rather than acting as incentives to innovators, or serving an important function by disclosing details about innovation, patents are little more than weapons to be used against innovators. We’ve highlighted numerous examples over the years, but recently-revealed emails between Steve Jobs and Ed Colligan (who was the CEO of Palm) highlight how Steve Jobs almost certainly illegally used patents as a weapon to threaten Palm away from hiring Apple employees. This all goes back to a DOJ investigation we wrote about years ago, concerning big Silicon Valley tech companies stupidly agreeing not to poach employees from each other. Not only is that an unfair restraint of trade, but as we’ve noted repeatedly, the free flow of employees between tech companies has been shown fairly conclusively to be a big part of why Silicon Valley companies tend to be so innovative.

While the DOJ settled with the tech companies, workers at those companies filed a civil lawsuit against their employers. Those companies have been trying to keep certain communications sealed and unavailable to the public, but Judge Lucy Koh rejected that request, leading to the public filing of an amazing declaration from Colligan that includes an email exchange between Colligan and Jobs, highlighting how Jobs sought to use patents as a weapon. Jobs told Colligan that if Palm hired more Apple employes, Apple would sue Palm for patent infringement. In the declaration, Colligan first explains how Jobs relayed the threat during a phone call:

In August 2007, I received a call from Steve Jobs, the Chief Executive Officer of Apple. In the months before the call, several employees had moved between the two companies. On the call, Mr. Jobs expressed concern about employees being hired away from Apple by Palm. As a solution, Mr. Jobs proposed an arrangement between Palm and Apple by which neither company would hire the other’s employees, including high tech employees. Mr. Jobs also suggested that if Palm did not agree to such an arrangement, Palm could face lawsuits alleging infringement of Apple’s many patents.

I did not agree to Mr. Jobs’s proposal and responded by sending an email on 15 August 24, 2007

The email exchange is worth reading. Colligan makes a case for why it’s silly to worry about employees changing companies, noting that every company wants to hire the best employees period, and that there’s a big enough market for everyone. He notes, correctly, that the proposed agreement is “not only wrong, it is likely illegal.” As he points out: “We can’t dictate where someone will work nor should we try. I can’t deny people who elect to pursue their livelihood at Palm the right to do so simply because they now work for Apple, and I wouldn’t want you to do that to current Palm employees. We can both try to persuade them to stay but, at the end of hte day, it is their choice, and a choice we should respect.”

From there he discusses just how dumb the patent threats are, pointing out that suing over patents doesn’t help anyone:

Steve, we don’t want to hurt Apple. As I said on the phone, Palm is

focused on building the best team in the industry, and we know there

is a lot of quality talent outside of Apple. On the other hand, 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.

He follows it up by noting that any such lawsuit would just create a nuclear war situation, since Palm has its own patents, though he clearly notes that the only people this benefits are the lawyers:

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. in addition, Palm now owns the former Siemens mobile patent portfolio, most

recently held by BenQ Corporation. This mobile computing and

communications portfolio includes over 1500 patent assets, the

majority filed in Europe. If you choose the litigation route, we can

respond with our own claims based on these patent assets, but don’t think litigation is the answer. We will both just end up paying a lot of lawyers a lot of money.

Entirely true. And then Steve Jobs hits back, first mocking Palm by noting that Apple has a lot more money, so it doesn’t mind throwing money away to lawyers on a bogus patent lawsuit as long as it hurts Palm, and then mocking the quality of Palm’s patents that it acquired from BenQ:

I’m sure you realize the asymmetry in the financial resources of our respective companies when you

say: “We will both just end up paying a lot of lawyers a lot of money.”

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.

As Dan O’Connor notes in the Patent Progress blog post above, this is no different than a mob boss protection racket, using the patents to warn Palm not to hire any more Apple employees or (effectively) “someone might get hurt” — with the patents standing in for the traditional baseball bat.

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Companies: apple, palm

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Comments on “Steve Jobs Used Patents Like A Mob Boss: Threatened To Sue Palm Over Patents If It Poached Any Apple Employees”

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Anonymous Coward says:


Likely, people in Silivon Valley came to respect Steve Jobs and his ability to resurrect Apple from the dead.

Remember, Steve Jobs and his legal team, negotiated a deal to obtain investment from their biggest rival, Microsoft.

Likely, a stamp of approval meant no additional issues. Besides, I imagine people at other companies enjoyed sending an email to him.

I recieved an email too; thought it was fake, especially when I saw the email headers were from a Sun Microsystems server. But he was a regular person, who preferred ideas and putting people to work at his company first.

It’s what a good CEO does.

Anonymous Coward says:

Re: Apple

I don’t get this comment. Are you saying that per the article above, and numerous others written on the subject elsewhere, that the very ILLEGAL actions undertaken by Steve Jobs (which consist of essentially ensuring no employees can be hired by any companies he essentially threatened) are acceptable/okay?

Or are you saying that it’s okay because that’s what a “good CEO does”? Meaning, anything and everything, as long as his company gets its way before anyone else does?

weneedhelp (profile) says:

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.

I’m glad he died. Yeah thats right I said it. What an asshole. It just goes to show beyond a shadow of a doubt, that patents are being used as a tool to threaten and stifle competition. And when put into a tool’s hands it will be abused. When will this craziness stop?

Mr. Applegate says:

Re: Re:

It will end when enough people actually start calling, writing and emailing their representatives demanding change. Right now its only the one percent complaining. When it gets to 50%+ they will listen. For now much easier to take the donation check from Corporate America and forgo what is good for the people. It isn’t like the people hold their representatives accountable anyway.

btr1701 (profile) says:

Re: Ugh...

The guy was an asshole – it pisses me off when the media and most of North America are ready to give him a sainthood

He wasn’t the only one doing this. Mike’s article singled Jobs out for criticism (and he deserves the criticism), but the wider story is that the email dump reveals the CEOs of most of the big Silicon Valley companies all conspiring with and/or threatening each other to prevent employee poaching.

Jobs deserves the scorn he’s getting here, but he’s not some lone tyrant behaving badly. They all were and unfortunately the TechDirt article doesn’t really make that point as clearly as it needed to be.

Simple Mind (profile) says:

What if Cave-man had a patent on fire.

Cave-lawyer: “No, no, no. You can’t have a patent on fire just on the process of making fire. If you make a fire by rubbing two sticks together you owe Cave-man a bear hide.”

Cave-hunter: “Well, I made this fire by banging two stones together so bug off.”

Cave-lawyer: “In that case you can either give Cave-man 3 beaver pelts (of which I will keep 2 for services), or we will sue you for a side of Mastadon.”

Cave-hunter: “But I thought you said his patent was only on making fire by rubbing two sticks together?”

Cave-lawyer: “Doesn’t matter. We wrote the patent with such broad terminology that we can still sue you. Better you just pay up the 3 little pelts than risk losing an entire half of a Mastadon. Plus you will be held up in extended court proceedings away from the hunt while your wife and children starve.”

(Very early in its history, the human race goes extinct.)

G Thompson (profile) says:

So when are Apple and the executive committee going to be charged since even though Steve Jobs stated all this in authenticated emails he was at the time the CEO of Apple Inc and therefore acting on behalf of the whole of Apple & it’s Board.

In fact the real title of this article should be “Apple Used Patents Like A Mob Boss: Threatened To Sue Palm Over Patents If It Poached Any Apple Employees” since whether it was Steve, Tim or their legal counsel it was Still Apple doing it. Which begs the next question.

How many other times have they done this, and also are they still doing this World wide. Maybe other jurisdictions should now investigate this highly damning evidence.

Dave says:

Not nice

Always had my suspicions about that “nice” Mr. Jobs. I have no qualms about running him down, even though he is no longer with us. The more I read, the more he appears to me to have been one of the most scheming, ruthless and devious b*st*rds on this planet, conning millions that his products were the best but, in reality, the functionality of virtually all could be obtained from other manufacturer’s products at considerably less cost. Elaborate marketing hype and first grade b*llsh*t kept the shekels rolling in. As for making a film about him…….words now fail me!

shane (profile) says:

Re: Not nice

I’m no fan of Jobs, or Gates for that matter, but for Jobs I will say that I think the benefit of his products was that he made them user friendly. Almost everyone who is an apple-maggot has the same reason why. “Expensive, but easy to use.”

Really, as tech saavy as I often seem to be, especially in comparison to most people, I only just recently broke off to Linux for my laptop, and no small motivation for the long wait was that it was just hard for me to be sure I was getting all the support for my hardware I should be.

shane (profile) says:

Re: Re: Not nice

Er… point being, people often are driven into the arms of the person who makes them feel they are taken care of. With Linux there is a real feeling you are out in the wilderness alone, and unless you’re pretty confident, there’s a significant feeling that maybe you’re better off dealing with the devil you know.

I think Apple relates to Windoze in the same way that Windoze relates to Linux in that regard.

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