Home Courts Judge limits ex-IBM exec’s work at Microsoft

Judge limits ex-IBM exec’s work at Microsoft

Former IBM executive Rodrigo Kede Lima won his wish to work for Microsoft, according to a court opinion, but not yet in the position he wants.

U.S. District Judge Philip M. Halpern granted IBM’s motion to block Lima from becoming Microsoft’s vice president for Latin America for the next eight months while IBM’s lawsuit accusing him of misappropriating trade secrets continues.

Halpern ruled Sept. 3 after a three-day hearing that “testimony established that Mr. Lima’s knowledge as a result of his roles at IBM is so substantial that he simply will not be able to divorce himself from that knowledge and information … in his proposed new role at Microsoft.”

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Lima

Lima, a native of Brazil, had worked for IBM for 25 years, rising through the ranks to become general manager for Latin America in 2012, global technology services manager in 2017 and general manager of integrated accounts in January.

He resigned in May to start the new position with Microsoft. IBM sued in U.S. District Court, White Plains, accusing him of violating a one-year noncompete agreement and of misappropriating trade secrets. The Armonk company also demanded the return of nearly $1.3 million in stock options.

IBM described Lima as among the top 1% of its highest-ranking executives and as privy to corporate secrets and strategies, particularly its cloud computing business.

Lima countered that IBM was exaggerating his knowledge of products and strategies; he had returned all IBM documents; IBM is not a significant competitor with Microsoft in cloud computing; and he had not and will not violate the noncompete agreement.

He also claimed that stopping him from working for Microsoft for a year would be an undue hardship.

Randy I. Walker, global managing director for financial services, testified that Lima was exposed to IBM’s strategies, targets for its financial cloud offerings, and other confidential information shared only with small groups of top executives.

Juan Antonio Zufiria, senior vice president for global technology services, testified that Lima had access to confidential information about “the core of our company’s business.”

Bridget van Kralingen, senior vice president of global markets, to whom Lima began reporting in January and who reports directly to IBM’s CEO, testified that the 77 accounts that Lima had managed constitute the largest and most significant clients and encompass all of IBM’s products and services worldwide.

Lima had prepared the 2020 priorities report that included strategies for responding to attacks by competitors, including Microsoft, she said. If Microsoft had knowledge of the plans it could change its strategies.

Lima “cannot help but use the knowledge that he has lived with and directed every single day,” she testified.

Lima testified that he had raised concerns with Zufiria in 2019 about employee morale, his lack of decision-making authority and a toxic work environment. IBM moved him from his position in global technical services to general manager of integrated accounts.

He was asked to sign the noncompete, in exchange for annual compensation of $1.5 million a year plus benefits. He said he could have made close to $20 million in four years.

Lima said he began interviewing with Microsoft in February 2019 and had exploratory conversations with Microsoft executive Jean-Philipe Courtois this past March.

Halpern noted that while Lima was in discussions with Microsoft, he was attending meetings of the IBM performance team at which confidential information was discussed.

Immigration paperwork prepared by Microsoft described Lima as “a person of extraordinary ability” who would “interface with leadership across Microsoft at the highest levels.”

Microsoft human resources official Stijn Nauwelaerts stated that Lima’s job would be to increase sales in cloud computing, win cloud customers and gain market share. But he said the position was structured to “avoid the noncompete situation.”  Lima would be based in Sao Paulo, Brazil at first, and then relocated to Fort Lauderdale, Florida after the noncompete period ended.

Halpern found that IBM had established, at this stage in the proceedings, a legitimate interest in protecting confidential information and trade secrets.

He found that a 12-month restriction is reasonable, and that the noncompete does not preclude Lima from working for Microsoft in areas that do not directly compete with IBM, such as Office 365, gaming and LinkedIn. In fact, Microsoft has put Lima on the payroll in a position not described in the opinion.

“There was simply no credible evidence adduced to suggest that …the noncompete would cause Mr. Lima to suffer undue hardship,” Halpern stated.

“The threat of Mr. Lima inevitably disclosing IBM’s trade secrets and confidential information to one of its competitors,” he said, “outweighs the purported hardships that Mr. Lima would face.”

He enjoined Lima from working as Microsoft’s corporate vice president for Latin America until May 18, 2021 or providing any services that violate the noncompete agreement, from soliciting any IBM customers he was involved with during his last 12 months with IBM, and from disclosing any confidential information.

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