Mr. Papermaster’s employment by Apple is a violation of his agreement with IBM against working for a competitor should he leave IBM. We will vigorously pursue this case in court.”

– IBM, October 2008

IBM’s legal efforts to enforce a noncompete agreement that would have prevented 26-year company veteran Mark Papermaster from jumping ship for a high-profile job at Apple appear to have failed. In a terse statement issued this morning, Apple (AAPL) said the litigation between IBM (IBM) and Mark Papermaster has been resolved. Come April 24, Papermaster will begin leading Apple’s iPod and iPhone hardware engineering teams as SVP of Devices Hardware Engineering, reporting to CEO Steve Jobs. He will, however, have to certify in July and October that he has complied with legal obligations and not used confidential IBM information at Apple. From IBM’s own release on the matter:

IBM and Mr. Papermaster have now agreed on a resolution of the lawsuit under which Mr. Papermaster may not begin employment with Apple until April 24, 2009, six months after leaving IBM, and will remain subject thereafter to all of his contractual and other legal duties to IBM, including the obligation not to use or disclose IBM’s confidential information. Following commencement of his employment with Apple, Mr. Papermaster will be required to certify, in July 2009 and again in October 2009, that he has complied with his legal obligations not to use or disclose IBM’s confidential or proprietary information. The preliminary injunction will be replaced by a court order under which the Court will have continuing jurisdiction over this matter, including compliance enforcement powers, until October 24, 2009, one year after Mr. Papermaster’s departure from IBM.”

Mark Papermaster, the IBM veteran poached by Apple last month to become its senior vice president of Devices Hardware Engineering, has filed a countersuit against his former employer in a fast-metastasizing dispute over his noncompete contract.

In documents filed late Thursday in federal court in New York, Papermaster argues his noncompete agreement with IBM (IBM) is “unreasonably broad.”

The ‘Business Enterprise’ restriction is unreasonably broad in that it purports to restrict Mr. Papermaster from going to work for any company that engages in competition with his former business unit to any extent, even if Mr. Papermaster will not be working for the part of the company that does so. Likewise, the ‘significant competitor or major competitor’ prong purports to restrict Mr. Papermaster from going to work for one of these companies even if the work that Mr. Papermaster will be doing is completely unrelated to the work he was doing at IBM. These provisions are not necessary to protect any legitimate interests of IBM.”

So not only is Papermaster’s noncompete “unreasonably broad,” it’s utterly irrelevant to his employment with Apple (AAPL).

And beyond that, it’s just plain silly.

Noncompetition agreements are unenforceable both in Texas, where Papermaster was employed by IBM, and California, where he’ll be working for Apple–a fact also noted in his countersuit. Given that, does IBM really want to be putting up $3 million to cover any damages Papermaster might incur should the case be decided in his favor?

“Mr. Papermaster’s employment by Apple is a violation of his agreement with IBM against working for a competitor should he leave IBM,” said Fred McNeese, director of IBM’s corporate media relations group. “We will vigorously pursue this case in court.”

And for good reason. As a member of the IBM (IBM) elite Integration and Values Team, Papermaster had broad access to the company’s intellectual property, trade secrets, and more. From the complaint:

The I&VT is charged with addressing the most difficult and important issues facing IBM, such as developing corporate strategy and driving innovation and growth and I&VT team members work with the most sensitive strategic information the Company possesses.

In his capacity as a member of the I&VT, Mr. Papermaster has gained access to confidential information concerning the Company’s strategic plans, marketing plans and long-term business opportunities, including the development of specific IBM products.

… Mr. Papermaster is IBM’s top expert in ‘Power’ architecture and technology, and he is privy to a whole host of trade secrets and confidences belonging to IBM that the company uses to design, develop and manufacture its products.”

Sounds like IBM has a lot to lose in Papermaster. Certainly, it’s worrisome that someone with his processor design expertise and deep knowledge of IBM research and innovation could end up at Apple, a company that’s made quite a name for itself recognizing the potential of innovations others have left fallow.