IBM sues former CIO as he nears deal with Amazon: 5 things to know

IBM filed a formal complaint against Jeff Smith, its former CIO, Aug. 1 to recoup damages for Mr. Smith's alleged breach of his non-compete agreement with IBM, according to The Register.

Here are five things to know about the lawsuit.

1. Mr. Smith allegedly planned to start working at Amazon Web Services on Aug. 7. However, by taking a position with AWS, Mr. Smith threatened to "violate his one-year non-competition agreement by going into direct competition with IBM as a senior executive of Amazon Web Services … one of IBM's main competitors in Cloud Computing," according to the 21-page complaint filed with the U.S. District Court for the Southern District of New York.

2. IBM alleged Mr. Smith would take "highly confidential information" related to developments in IBM's cloud computing business with him to AWS. IBM said it plans to launch next-generation cloud computing technology in the coming year, and that these "trade secrets," which Mr. Smith knew, would be very valuable to AWS.

3. IBM went on to allege Mr. Smith had already "shared inside IBM information with the CEO of AWS, Andrew Jassy," while still serving as an IBM executive. Mr. Smith reportedly wiped his company-issued phone and tablet prior to departing from IBM, making it "impossible for IBM to detect other communications with [Mr.] Jassy or to determine if he transferred any other IBM information."

4. Mr. Smith allegedly told IBM he intended to accept a job at AWS March 28, with a proposed start date of April 24. After discussions among counsel for AWS, IBM and Mr. Smith, he announced his resignation April 27 without accepting employment from AWS, at which point he said he would pursue other opportunities, according to the complaint.

5. IBM alleged AWS later informed IBM officials it still intended for Mr. Smith to serve as vice president of the company.

The complaint states IBM has the right to rescind the long-term incentive awards it provided to Mr. Smith based on the terms and conditions outlined in its long-term performance plan. IBM said Mr. Smith would be required to pay costs and expenses incurred by the company, such as stock options and restricted stock units he received in the year prior to his resignation, which total roughly $1.71 million.

Click here to view the full complaint.

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