Apple Files $5-Million Lawsuit Against Jobs

Times Staff Writers

Apple Computer filed a $5-million-plus lawsuit Monday against its co-founder and former chairman, Steven P. Jobs, charging that he breached his fiduciary responsibility and that his planned new company would use confidential information.

The court action is the latest move in an acrimonious power struggle that spurred Jobs’ resignation last Tuesday. Jobs said he would be starting a new computer company and hired five Apple employees to join him. Apple’s suit, filed in Superior Court in Santa Clara County, also names Richard A. Page, a key Apple engineer who was among those resigning to join Jobs’ new venture.

New Firm Called Next Inc.

Although legal disputes over ownership of technical knowledge have become almost commonplace in Silicon Valley, Apple’s suit is extraordinary because it accuses Jobs of pirating knowledge and employees while still its chairman.


The suit claims that Jobs intends to call his firm Next Inc. and use technology that Apple “has committed thousands of man-years of effort and millions of dollars” to develop. It also said that Jobs “secretly planned to finance his competing enterprise” by selling a portion of his Apple stock holdings without revealing his intentions, a violation of federal securities laws.

Jobs, 30, co-founded Apple eight years ago with Stephen Wozniak, who left Apple earlier this year. Jobs could not be reached for comment.

Appointment Asked

The suit asks that Jobs and Page be prohibited from using any proprietary information and from raiding other executives for the purpose of gaining access to Apple information. It seeks monetary damages of at least $5 million against Jobs and Page, plus an unspecified amount in punitive damages against Jobs.

In addition, it asks the court to impose stiff restrictions on the operations of Jobs’ new company, including appointing someone to periodically inspect any activity of Jobs related to the manufacture of microcomputers.

Apple President John Sculley, the man who Jobs hired two years ago to run Apple, strongly hinted last week that he would take legal action against his one-time close friend on grounds that he had acted against the Cupertino, Calif.-based personal computer maker’s best interests.

Jobs first told Apple’s board of directors on Sept. 12 that he planned to start a new company but that it wouldn’t compete against Apple. The five employees turned in their resignations the next day.


The board’s angry reaction to the raid of talent was a key factor in Jobs’ resignation as chairman and director. Although Jobs announced his resignation last Tuesday, Apple did not acknowledge the resignation until Wednesday.

Among other things, Apple claimed that Jobs falsely represented his new company and his intentions to the board and that, in fact, his new company plans to compete with Apple.

New Personal Computer

Little has been said publicly about the computer that Jobs intends to develop at his new company, but Apple said that Page was responsible for designing and developing a new personal computer that represents Apple’s next-generation product.

“Jobs and Page had access to confidential and proprietary information about Apple’s new-product development plans, and Jobs had additional access to confidential information about the company’s strategic business plans, marketing strategies and key personnel,” Apple said in a statement.

Apple contended that Jobs violated his fiduciary responsibilities as chairman by “secretly” planning his new firm to compete with Apple and, while he was still chairman, by luring away key employees with intimate knowledge of Apple’s secret technology.

Apple said Jobs and Page had agreed, as conditions of their employment, not to use confidential or proprietary information of Apples’ for the benefit of any competing enterprise.


Such agreements are standard in the high-technology industry, and such lawsuits against former employees for allegedly stealing technology are not uncommon in the Silicon Valley, an area south of San Francisco where Apple is headquartered.