In December 2008, Research in Motion Ltd. (RIM) sued Motorola Inc. (Motorola) for, what it called; illegally preventing it from hiring employees that Motorola had laid off. According to RIM, the two companies had entered into an agreement in February 2008 on not hiring each other's employees or the newly separated ex-employees. When Motorola announced lay offs in large numbers, RIM, attempted to hire and gain some engineers at a lower cost. RIM considered that the agreement had expired in August 2008 and prayed to the Chicago court for damages.
RIM contended that despite the agreement having expired, Motorola had unlawfully extended the contract and prevented RIM from offering jobs to the fired Motorola employees.
RIM, well-known as the BlackBerry mobile phone maker, was established in Ontario, Canada, in 1984. With offices throughout North America, Europe, and the Asia Pacific,1 it is one of the leading wireless manufacturers, designing, manufacturing, and marketing its products worldwide.
The company provides access to information through email, phone, text messaging, the internet and intranet-based applications using its integrated wireless hardware and software. RIM technology also supports numerous other manufacturers and developers with their wireless connections to improve their products and services.
Motorola is headquartered in Schaumburg, Illinois, USA, and has been in the communication inventions and innovations business for almost 80 years as of 2008.
Some of its key achievements include the construction of the device that transmitted the first message from the moon and also the creation of the first handheld portable cellular phone called DynaTAC (DYNamic Total Area Coverage) which created a revolution in cellular communication. Motorola was the pioneer in launching the 'push-to-talk' technology. It also launched the first all-digital high definition television (HDTV).
Motorola's range of products and services include wireless handsets and accessories, digital equipment for entertainment purposes, voice and data communication systems, wireless access systems, and enterprise mobility solutions.
Motorola and RIM had always been adversaries in selling high end mobile phone handsets which contained features like e-mail and internet access, music players, or cameras. While RIM continued to expand, developing compact and slender handsets, Motorola had been facing hard times since the mid-2000s.
Its market position fell to number 3 behind Samsung at number 2 and Nokia at number 1 in 2008.3 In February 2008, RIM and Motorola entered into a mutual agreement wherein they agreed to exchange confidential information and to avoid poaching each other's employees. Experts felt that the agreement was mainly aimed at ensuring that employees did not move away to a competitor carrying with them vital information and trade secrets.
However, in September 2008, Motorola sued RIM on the grounds of poaching 40 of its employees in Florida since the beginning of the year and claimed US$50,000 as compensation
The company attached copies of emails sent to its employees by RIM as part of the evidence filed in court. Motorola had also taken legal action against RIM in early 2008 for allegedly violating seven US patents on mobile-communication technology. RIM counter-sued Motorola for "anti-competitive conduct"and for claiming "unreasonable"royalties on patents that Motorola owned and RIM licensed.
In December 2008, RIM sued Motorola for preventing it from hiring employees fired by Motorola.
RIM claimed that the agreement that the two companies, inked in early 2008, had expired in August 2008 and requested the court to nullify the agreement. The company also claimed damages from Motorola for adopting what it called, unethical ways.
RIM mentioned in the lawsuit that while it continued to grow and hire new employees both in the US and worldwide, Motorola had publicly announced its intentions to lay off in large numbers.
Motorola had announced that it would be cutting executive pays and employee benefits in order to control the company's expenses as its handset division had incurred a loss of almost US$2.8 billion since the beginning of 2007
By the end of 2008, Motorola had fired over 3,000 employees and these employees were reportedly having a tough time finding a new job because of the company's nondisclosure agreements with its competitors
The lawsuits brought to the fore the long-standing debate on talent poaching and the inter-related ethical concerns. Some experts saw nothing wrong in a company hiring from its competitors. For instance, Dr. John Sullivan of Dr. John Sullivan and Associates, author, speaker, corporate advisor, and educator, said that poaching employees was not illegal because employees were not 'owned' to begin with.
Poaching had become a global phenomenon and was practiced extensively in several countries. The benefits of poaching, according to him, were getting currently employed, well trained, and high caliber employees as opposed to hiring from non-competitors who were inexperienced, or did not have the relevant experience which would increase training costs.
Rather than blame other companies, employers should provide their employees with better opportunities that would prevent them from moving to different positions, he contended
But there were others who felt that poaching was unethical. Companies too identified it as a key concern and were resorting increasingly to lawsuits to discourage this practice. According to the National Law Journal8, there had been a steep increase in poaching lawsuits in all sectors including IT and banking in 2008.
According to Peter A. Steinmeyer, a partner in the Chicago office of Epstein Becker & Green, "Employers are especially concerned about departing employees taking trade secrets with them. They never want their top performers to go out the door. But in terms of what's driving the litigation, it's a desire to protect confidential information and trade secrets
However, there were others who wondered whether it was ethical for companies such as Motorola, which had already failed to protect the jobs of its employees due to certain business constraints, to insist on their employees not taking up a job with their competitors.
References & Suggested Readings
1. "RIM, Motorola Battle on Mobile Patents,"www.cioinsight.com, February 19, 2008.
2. John Sullivan, "Aggressive Talent Poaching in Bathrooms and Parking Lots,"www.ere.net, February 25, 2008.
3. "Motorola Sues RIM Over Poaching Charges,"www.telecomtiger.com, September 9, 2008
4. Tresa Baldas, "Poaching Lawsuits Aim to Stifle Talent Raids,"www.law.com, November 24, 2008.
5. "RIM and Motorola Battle it out Over an Expired Agreement,"www.phonearena.com, December 27, 2008
6. Marin Perez, "RIM Takes Motorola To Court Over Jobs,"www.informationweek.com, December 29, 2008
7. www.rim.com
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