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Skilled in the Art: IBM and Microsoft Settle; K&L Gates Throws Down

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IBM and Microsoft

IBM and Microsoft

IBM, Microsoft Call Off the Dogs on Diversity

IBM and Microsoft have wisely split the baby in a trade secrets dispute that wasn’t making either side look good.

IBM sued its former chief diversity officer, Lindsay-Rae McIntyre, last month shortly after she resigned to accept the same position with Microsoft. IBM v. McIntyre set off a vigorous debate in the IP and employment bars over whether knowledge of a company’s diversity efforts—as opposed to software code or customer lists—could be considered a protectable trade secret.

Just as important was the debate over whether it should be. Lawyers like Winston & Strawn’s Silicon Valley manger, Kathi Vidal, questioned the morality of “siloing” ideas to advance diversity and inclusion.

“There’s something about the optics of going after a diversity officer that just felt weird to me,” IP litigator Venkat Balasubramani of Focal PLLC told GeekWire. “That made me think, ‘Wow, I wonder if they may regret doing so,’ just because I could see people looking at it and saying, ‘This is really scorched earth.’”

So IBM was getting beaten up for locking down its diversity magic. At the same time, IBM never missed a chance to remind everyone that Microsoft is facing a high-profile gender diversity class action where it tried tomaintain confidentiality of its own diversity data.

Rather than rain down crap on each other indefinitely, IBM agreed that McIntyre can start at Microsoft in July, six months into her one-year non-compete agreement.

From the law perspective, I’m counting this as a slight win for IBM. The company was trying to expand the definition of a trade secret in a state that generally disfavors non-compete agreements. This deal will probably make other employees at least think twice before joining a direct competitor, and it sure beats losing. IBM was represented by a Paul, Weiss, Rifkind, Wharton & Garrison team led by partner Bob Atkins.

Microsoft, on the other hand, gets its woman, albeit six months later than planned. The publicity around the suit will add to McIntyre’s cachet as a recruiter while broadcasting Microsoft’s intent to do better on diversity. From the real world perspective, I give the W to Microsoft. An Orrick, Herrington & Sutcliffe team led by partner Mike Delikat plus counsel from Morgan, Lewis & Bockius repped Microsoft.

Kemer, Van Nest & Peters IP partner Warren Braunig, who’s helped guide my understanding of this case, I think is mostly with me. “It’s only a win for IBM if you start with the premise that these were not trade secrets to begin with,” says Braunig. “Given the challenges IBM would’ve had in establishing misappropriation or the need for a restrictive covenant, putting [McIntyre] on the bench for five months is a decent outcome.”

Braunig, who says IBM’s goal was “fundamentally anti-competitive,” suggests that the settlement is unsatisfying from the litigator’s perspective. “Nothing in this settlement resolves the question of whether a public company’s diversity data or hiring strategies qualifies as a trade secret,” he said. “That novel theory will have to await another day.”

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Article Credit: Law

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