IBM Wins Round Against Dell Exec

David Johnson cannot assume full duties in Round Rock until lawsuit is resolved.
An appeals court has granted IBM's emergency request to impose strict limits on the duties its former M&A chief can perform while working at Dell until Big Blue's breach of contract lawsuit against the executive is fully heard.

The U.S. Court of Appeals for the Second Circuit granted IBM's request for an injunction on Friday. The injunction upholds a previous court ruling, briefly overturned by the Manhattan federal District Court, that limits former IBM VP for corporate development David Johnson to sideline duties at Dell.

Under the ruling, Johnson cannot participate in Dell strategy meetings or weigh in on matters that could impact IBM, at least until the case is complete. Johnson must also keep a log of his activities at Dell and supply it to the court. Johnson joined Dell as senior VP for strategy last month—prompting an almost immediate lawsuit from IBM.

IBM claims Johnson violated a non-compete clause and that his departure to a competitor would be injurious because Johnson is aware of Big Blue's innermost secrets. For his part, Johnson maintains the agreement carries no legal weight because he intentionally signed it in the wrong place.

Dell has been relatively timid on the acquisition front despite its status as one of the world's largest tech vendors. The company has completed just ten deals since 1999—the largest a $1.4 billion buyout of storage technology specialist EqualLogic.

By contrast, IBM announced or sealed 14 acquisitions in 2008 alone, including the $5 billion takeover of Canadian business software developer Cognos.

Johnson has overseen IBM's frenetic merger activity for the past nine years and is a twenty-seven year veteran of the company.

The case remains ongoing in U.S. District Court for Southern Manhattan.