Five weeks into a trial over its alleged theft of intellectual property and monopolistic behavior, IBM has settled with software maker Compuware in a case that centered on whether corporate confidentiality agreements were violated.
The plaintiff had claimed that, obtaining trade secrets from former Compuware employees it hired, Big Blue was able to drastically speed development of competing software products for mainframe computers.
As part of the agreement announced Tuesday, International Business Machines Corp. will license $140 million worth of Compuware Corp. software over four years. It has also offered to purchase $260 million worth of Compuware services over four years.
Compuware shares rose 42 cents, or 6 percent, to $7.39 on the Nasdaq Stock Market. IBM shares rose 57 cents to $90.08 on the New York Stock Exchange.
For decades, Compuware has made software that helps people run IBM-made mainframe computers. IBM began to sell its own versions of such software in 1999.
Compuware claimed IBM stole trade secrets to copy two of its programs _ File-AID, a file manager, and Abend-AID, a program that helps users locate the source of glitches.
The plaintiff also accused IBM of violating antitrust laws by tying the sale of certain products, including mainframe computers, to the sale of mainframe software that competes with Compuware's products.
IBM has denied doing anything improper, and had accused Compuware of damaging the mainframe business through high prices.
"IBM can continue to distribute our products at the prices we choose to sell them, and that's a benefit to our customers," IBM spokesman Tim Breuer said Tuesday.
The five-week federal trial in Detroit put a spotlight on the legal restrictions on workers' mobility. Companies routinely require employees to sign confidentiality agreements when they begin jobs, but workers and employers often have vastly different interpretations of what those agreements mean and what qualifies as a trade secret.
Confidentiality agreements are used in all types of businesses _ not just obvious areas like software and automobile design. They cover everything from design blueprints to financial information and customer lists. Although the law protects trade secrets regardless of whether a confidentiality agreement was signed, such agreements can help employers make their case.
What made the Compuware-IBM case complicated was that Compuware did not claim its former employees took documents or computer discs with source code. Rather, it said they used their knowledge of Compuware to help IBM. Though some of that knowledge was technical, much of it concerned murkier things such as customer preferences.
Jill Bertini, who worked for Compuware for six years before moving to IBM, testified that on her first day at IBM she provided colleagues with estimates of Compuware's market penetration for various versions of its software. That information helped IBM prioritize which of its versions to release first.
Bertini, a sales representative with a technical background, said she did not consider that information confidential.
"These were my opinions," she said. "They were not based on market research or anything Compuware had told me."
Former Compuware employee Allan Tortorice testified about advice he gave to IBM software developers on features to include in new products. Tortorice said the information came from research he conducted while at IBM; Compuware alleged it came from his conversations with customers while at Compuware.
"There's no evidence they've done any customer research at all," said Dan Follis, associate general counsel at Compuware. "They used our employees to tell them, 'This is what's most important, and don't go down this hole, you want to avoid this, this is how to do that.'"
IBM declined to comment on the case. Its lawyers have called Compuware's claims an attempt to block competition.
Bertini said in her testimony she reviewed her Compuware agreement with IBM lawyers before starting work. The conclusion they reached was that the nondisclosure clauses did not apply to her because she did not have access to confidential information, Bertini said.
But hiring someone who knows a competitor's secrets to work on similar projects is inherently risky, said William L. LaFuze, a Houston-based lawyer and chairman of the American Bar Association's intellectual property section.
The employee may not intentionally give away secrets, but they may have so much information in their head that they can't do their job without using it.