[will_brown]

Philip let me address the three legal issues you seemed curious about.

1. Non-compete clauses are not exactly "illegal" in California rather unenforceable. They are put into agreements typically as boiler plate "I agree for a period of 'x' I will not work for a company that competes with employer or start my own." So if you were hired in California and went to work for a competing company in California, it would be safe to say if there was a non-compete" clause in the original contract the courts would not enforce it. However, these are multi-national corporations so non-compete clauses can be enforceable in a lot of jurisdictions outside California.

2. As it relates to the idea that Apple was trying to sign an agreement with Palm not to hire each others employees, anti-compete is between the employer/employee not two competing companies, so the companies have the contractual right to enter into these agreements. *This may be a general rule, but your gut instinct is right on because there are a number of exceptions that would make agreements between competing companies illegal, for example if they had an effect of price fixing.

3. Apple's approach of "threatening lawsuit" for patent infringement is not tactful, but not extortion either. Laws on this point can be very strict, for example you cannot necessarily threaten lawsuit, but Apple is within its right to send cease and desist with formal demand when it feels its patents are being violated. Naturally, part of a demand is agreement to not pursue the lawsuit if the demand is met. It may sound like extortion, but do not forget Palm does not have to agree to the terms of the demand (Palm might not even be violating Apple patents) and Palm can always take its chances in court and even if they lost they could still hire Apple employees.

[philp]

Thank you for your detailed reply Will. Quite astonishing what kind of professional behavior is ostensibly permissible. To the layman, Steve looks like a total crook.

[will_brown]

Thanks I tried to provide an objective legal analysis. That said, I think you raise a very important point just b/c something is legally permissible does not make it moral behavior.

[JL2010]

I'm curious about this bit: Apple is within its right to send cease and desist with formal demand when it feels its patents are being violated. Naturally, part of a demand is agreement to not pursue the lawsuit if the demand is met.

Typically, for patent disputes, the demand is to stop using the particular technology in question or to enter a licensing agreement, is that correct? So would it be legally OK to tack on another demand that is clearly not related to the patent infringement? Such as, mutual agreement not to poach employees. Or do the demands not have to be relevant to the patent at all?

[will_brown]

As bizarre as it sounds the demand can be outside the scope of the patent infringement. You are right, that typically a cease and desist would be along the lines of: 1. you are violating our registered patent(s), 2. we demand you cease and desist and/or begin paying royalties and past royalties calculated to be "$x".

However, you can be very creative and tack on other demands unrelated to the patent infringement. One very important point here, regarding settlements and settlement offers, parties to a lawsuit are prohibited from disclosing settlement offers/settlement discussions to the Court (again like all things in law, this is the general rule and there are exceptions, example if someone violates a settlement agreement and you sue to enforce said agreement obviously you disclose the confidential agreement to the court).

[fizx]

Have you been paying attention?

http://mashable.com/2010/09/24/doj-anticompetitive-employee-...

[will_brown]

Fizx, this article is right on point, I would like to read the actual settlement, but without doing that here is my opinion:

>The Department of Justice has reached a settlement with Adobe, Google, Intel, Intuit, Apple and Pixar that prevents the companies from entering "no-poach" agreements for each other's employees.

So I would still say the general rule is these types of "anti-poach employee agreements" are legal but the DOJ has carved out an exception as it relates to ONLY these six companies, where they cannot enter into said agreements with each other. However, as you notice Palm was not part of the DOJ settlement, so without reading the Settlement itself I would still suggest Apple has rights to enter into such an agreement with Palm or any company not one of the six.

[muyuu]

I think think GP is claiming that non-compete clauses are illegal in California. I think he means that coercing them is.

[walshemj]

are not Cartels illegal under the The Sherman Antitrust Act of 1890 - fixing the price of labor presumably counts.

[will_brown]

Fixing price of labor would be more along the lines of Palm and Apple coming together and agreeing not to pay their employees greater than "$X". This way it would not matter what company Employee goes to work because his salary would be fixed across the industry. (There are always exceptions, for example if you practice law you have to be a member of the State Bar making Bars natural monopolies - and Bars also fix the industry prices by setting the fees lawyers can charge. Yet Bars do not violate the Sherman Act)

Courts will distinguish that type of labor cost fixing from Palm and Apple agreeing to not solicit one anthers employees, which will keep their labor cost down, but this is not the prohibited behavior contemplated by the Sherman Act.

[walshemj]

Interesting I suppose a "resonable person" would think suppressing the wage bill counted but as ever one rune for you and me one for the employer.

Though this does reduce the state tax take which I know that individual states can get quite litigious over this issue

[pekk]

Is the antitrust act used at all any more?

[will_brown]

Yes, as you might recall Google was just under investigation by the DOJ and FTC for the last 2 years for potential anti-trust violations(Google recently settled this matter). Generally Google was accused of using its search power to gain an edge of market rivals.

An example of the type of alleged behavior, say you were in the coupon business and you bought ads on Google it would have cost "x", but Google used its knowledge of search and saw coupons was big business so Google created Google Offers and began buying its own ads effectively driving up the cost of your ads to "1000x".

So maybe your right, can anyone say Anti-Trust Act is used at all if some companies can set aside $500 million to make anti-trust investigations disappear? (Google is publicly traded so the $500 million set aside to settle this investigation is public record with FTC).