Apple Sues Jobs, Charging Misuse Of Firm's Research

By Patricia Bellew Gray, Staff Reporter
The Wall Street Journal

Sep 24, 1985

Cupertino, Calif. -- Apple Computer Inc. said it sued Steven P. Jobs, its co-founder and former chairman, accusing him of "secretly scheming" to use company research for a new venture and then deceiving the company's board about his plans.

Mr. Jobs last week resigned as chairman of Apple in a bitter fight with top management and directors over his plans to start another computer company.

The suit, filed yesterday in Santa Clara County Superior Court, charged that Mr. Jobs violated his responsibilities to Apple by "secretly planning" to form a company that would compete with Apple and by recruiting certain important employees while he was still chairman.

"I'm very surprised that Apple is suing us," Mr. Jobs said last night. "We have spent an entire week talking with Apple lawyers, showing them that we have no intention of taking or using any Apple confidential information or proprietary technology in our new company. . . . This sort of thing sure is hell, (it) doesn't help Apple or its employees. We don't want to get involved with an unjustified lawsuit. We just want to build our company and invent something new."

Mr. Jobs continued: "It has just gotten to the point where I can't listen to this stuff any more and it is time to tell the real story. I guess the fact that I'm not coming back (to Apple) is finally sinking in and people are scared. . . . I thought Apple was a big enough place to find a place for me."

Mr. Jobs said the suit "hit us out of the blue."

In its suit, Apple said Mr. Jobs, as chairman, had access to "confidential information about the company's strategic business plans, marketing strategies and key personnel." The suit said Apple believes that Mr. Jobs plans to use proprietary information about an advanced computer to help launch his new venture.

Apple's suit also names Richard A. Page, formerly a senior engineer for the company and one of five Apple employees who resigned 11 days ago to join Mr. Jobs's new company. Mr. Page was responsible for designing a new personal computer for Apple, the company said. The suit also charges Mr. Page with misappropriating confidential information from Apple's research laboratories.

Mr. Page couldn't be reached for comment.

Apple charged in its suit that Mr. Jobs had feigned loyalty to the company while he "secretly schemed . . . to injure" Apple by starting a new concern that would go after one of Apple's fastest-growing markets: colleges and universities.

Mr. Jobs's new company, named Next Inc., is believed to be developing a $3,000 workstation that could make use of some of the features of Apple's Macintosh personal computer, such as its ease of use.

Apple also accused Mr. Jobs and Mr. Page of unethical business practices. Apple said in the suit that Mr. Jobs and Mr. Page had agreed to abide by a company code of business ethics -- partly written by Mr. Jobs -- that called for the computer maker's employees to "be totally open, honest and direct in business dealings" and to avoid taking an interest in any venture that could "cause divided loyalty."

The suit alleges that Mr. Jobs lied to directors about his new company. The suit says that on Sept. 12, after advising the board that his venture wouldn't compete with Apple, that he wouldn't use any confidential information gleaned from Apple's technical or marketing research and that he wouldn't hire away any key employees, Mr. Jobs asked directors for a license to use software technology developed for the Macintosh.

Also on Sept. 12, Apple directors had considered investing in Mr. Jobs's new venture. But after learning that he had recruited five Apple employees, the board ruled out any such investment.

Apple's lawsuit is the latest twist in one of the most public and acrimonious divorces ever of entrepreneur and company.

Mr. Jobs, who was stripped of operating responsibilities at the company in a major reorganization four months ago, outraged Apple's top managers and directors when he disclosed that he had hired away some of the company's hottest young engineers and marketers.

Apple executives publicly denounced Mr. Jobs for raiding Apple, and the company was said to be considering demanding his resignation. Mr. Jobs, angry and hurt by the uproar over his new venture, resigned as chairman last Tuesday. In his letter of resignation, he said the reorganization "left me with no work to do."

Apple accepted Mr. Jobs's resignation last week and said it was considering taking legal action against him. Yesterday, a spokeswoman said Apple "had no choice" but to sue Mr. Jobs. "The real concern is protecting (the company's) proprietary information," she said.

In the suit, Apple is seeking unspecified damages from Mr. Jobs and Mr. Page. The suit claims that Mr. Jobs's actions regarding the new venture already have cost the company more than $5 million.

The spokeswoman said she wasn't sure whether the company would seek an injunction barring the two men from using Apple's trade secrets.

Copyright Dow Jones & Company Inc