IBM sues former CIO Jeff Smith over move to AWS

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IBM sues former CIO Jeff Smith over move to AWS

Big Blue outraged over contract breach.

IBM has sued its former chief information officer Jeff Smith for violating a non-compete agreement after he took up a new executive role at IBM rival Amazon Web Services.

Smith - who is well-known in Australia for having served in CIO roles at the likes of Telstra and Suncorp - left IBM in May after three years to "explore other opportunities", the company said at the time.

It has now been revealed that Smith had departed to take up a vice president position at competing cloud services provider AWS, managing strategy and operations and reporting into CEO Andy Jassy.

Smith had initially planned to resign and go straight to AWS, IBM said, but agreed not to take the AWS role after hearing IBM's concerns about the competitive threat that posed.

However he ended up accepting the AWS role a month after leaving IBM, with a start date of August 7, IBM claimed in court documents filed in the US, provided to iTnews by sister site CRN USA.

IBM claims moving to one of its "champion competitors" violates Smith's one-year non-competition agreement.

"If not enjoined to wait a year before competing against IBM - as he expressly agreed he would - Smith will take with him to AWS all the highly confidential information he knows about the technological innovations IBM is developing specifically in the cloud computing business where AWS competes directly against IBM," the claim states.

IBM claims Smith was one of only a dozen high-ranking executives involved in "top-level decision-making" about the development of its next-generation cloud computing technology, to be launched in the next 12 months.

The new platform will "combine new hardware and software to provide cloud computing services to large enterprises that are faster, more secure and less expensive than before," IBM said in court documents.

It is hoping that its new offerings will be able to pressure AWS - long seen as a leader in cloud pricing - on the cost front.

But IBM says Smith would take to AWS details like internal costs, design specifications, performance capabilities and release plans on the new cloud platform - "all which would be very valuable to AWS".

These "secrets" were so senstitive that he was told not to keep copies of written project presentations, IBM said.

It also claims Smith "cannot be trusted" to preserve sensitive IBM information because he had shared inside information with AWS boss Andy Jassy whilst employed at IBM, and had wiped his company-issued phone and tablet to prevent other communications from being detected.

"... it is inevitable that Smith will use IBM's trade secrets against IBM if he joins AWS before the expiration of his non-compete period," IBM argues.

The tech giant said Smith's breach was "especially flagrant" given the wealth of opportunity open to a CIO across "almost any industry".

"... he has chosen to to leave IBM and go not only to a direct competitor, but one of the competitors that would have the greatest use for the IBM secrets he was entrusted to protect."

IBM wants the court to enforce Smith's one-year non-compete clause, which would mean he could not join AWS for another nine months.

It is also pushing for Smith to repay US$1.7 million in stock bonuses.

Smith has been allowed to begin work at AWS in "listen and learn mode only" for the purposes of training, but cannot seek out customers, recruit staff or disclose confidential information.

A hearing has been scheduled for August 21.

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