Lithium-ion battery manufacturer A123 Systems has sued Apple, alleging that the smartphone and tablet manufacturer has been poaching its employees. Some of you may remember A123 Systems high-profile bankruptcy from several years ago — the company collapsed in 2012 after a meteoric ascent. Post-bankruptcy, A123 Systems was bought by Chinese conglomerate Wanxiang, and it has continued to develop battery technology and win customers for its stationary installations through the present day.
A123’s complaint alleges that five of its top researchers have been lured away by Apple in violation of their noncompete agreements. Said agreements (we’ve reprinted part of one below) forbid an employee from working for any competitor of A123 Systems and forbid employees who leave the company from soliciting their fellow co-workers from jumping ship alongside them.
A123 then states that it believes Apple “is currently developing a large scale battery divisionto compete in the very same field as A123,” that it began poaching A123’s employees in June of 2014, and that it has also recruited employees from LG, Samsung, Panasonic, Toshiba, and Johnson Controls (these, apparently, have chosen not to file suit). One particular defendant, Mujeeb Ijaz, is accused of actively recruiting the other four, putting him in double-violation of the non-compete.
The company then steps through the various steps it took before filing a lawsuit, including formally notifying Apple that it believed an employee had breached their contract and its discussions with a third company that first alerted it to the possibility of employee poaching. More interesting, from the technical perspective, is what this says about Apple’s potential car plans.
Expertise is hard to find
If you wanted to poach employees for a major battery initiative, you could do far worse than A123 Systems. While the company was initially blamed for the collapse of Fisker and its ill-fated Fisker Karma, later information suggested that Fisker had plenty of its own financial problems. A123 Systems insists it delivered every battery Fisker ever ordered and paid for.
If you want to build an electric vehicle, you need a team of people with significant expertise in the field. While renewable energy and rechargeable batteries are hot topics these days, many of the experts in the industry already work with (or partner closely) with existing auto manufacturers or companies like Tesla. It’s easy to see how Apple might have opted to co-opt other talent to design its products rather than launching a new effort entirely from scratch. A123 may have focused more on stationary batteries after its bankruptcy, but the company still has a foot in both camps.
This also highlights some of the thorny issues with non-competes that we’ve discussed in other contexts. Communicating with other employees in an attempt to lure them away from existing jobs is a fairly clear-cut violation of one’s contract, but only one employee is accused of that. Whether A123 Systems can prove that Apple poached its workers or not may depend on their responsibilities and the scope of the technology they’re working on — assuming that Cupertino doesn’t just pay a sum of money to settle the issue.