Settlement Gives Apple the Right to Inspect Work of Job's New Firm

By Andrew Pollack
New York Times

San Francisco - January 19, 1986 - Apple Computer Inc., and its former chairman, Steven Jobs, have reached a settlement in a lawsuit filed when Jobs formed his own company with other Apple employees.

While both sides hailed the agreement as favorable, it does place some restrictions on Jobs and his new company, Next Inc. For example, it gives Apple the right to inspect Next products before they are marketed to determine if they contain what Apple views to be trade secrets.

Next officials said the restrictions would not interfere with company plans. "The key thing is the lawsuit was dismissed and this is just great," Jobs said Friday.

Apple sued Jobs in September when Jobs, after a bitter falling out with Apple's president, John Sculley, left Apple and, with five Apple employees, started his own company. In its suit, filed in a state Superior Court in Santa Clara County, Calif., Apple charged Jobs with breach of fiduciary responsibility and masterminding a "nefarious" scheme to steal Apple's trade secrets.

Under terms of the settlement, Next has agreed to stick to certain minimum specifications in any computer it markets for the next two years. The specifications basically require that the Next computer be more powerful than the Apple products and not use the same operating system and software, according to Next officials.

Moreover, Next has agreed not to market any computers at all until July 1, 1987, according to a summary of the settlement prepared by Apple's law firm, Brown & Bain.

Next also agreed to provide Apple with prototypes of its products for Apple's inspection. If Apple believes its proprietary information or technology is being used, it can appeal to an arbitrator.

Jobs also agreed not to hire any more Apple employees for six months or to solicit any for a year. Next now has about 10 former Apple employees. Apple also dismissed all proceedings against Richard Page, a former Apple engineer and now a Next employee.

Jobs said the restrictions merely require Next to do what it said it would do in the first place. The restriction on not marketing a computer before July 1987, he said, was not important because Next is not planning to introduce its first product until the fall of that year.

Next is working on powerful computers for use in university education. Jobs said they would be far more powerful than Apple systems.

The two companies had talked about a settlement even before the suit was filed.

But attitudes have become more conciliatory recently. Sculley said Thursday that "I'd like to see the time come when Steve Jobs is as welcome at Apple as Steve Wozniak is." Wozniak, who co-founded Apple with Jobs and left in February, is now a consultant and has been purchasing Apple stock.