With iPod creator Tony Faddell bowing out of Apple, and Mark Papermaster, former manager of IBM's critical blade server business and mastermind of the PowerPCs, stepping in as the iPod division head, things were looking good for Apple.  However Big Blue was a little upset about the move, as Mr. Papermaster had signed a non-compete contract and had intimate knowledge of IP that could help Apple make headway into the server business.  IBM decided to sue Apple, as it was also fearful that Mr. Papermaster might also be trying to lure IBM employees to Apple.

IBM pointed out that the non-compete clause forbade the 26-year veteran from taking a position with a competitor for one year after he quit, and that he took such a position in November just a month after leaving IBM.  However, Mr. Papermaster countered that the nature of his work would be quite different and that a delay would be bad for the tech industry and force him to lose his "dream job".

As a result, Apple's iPod division was without a definite head, casting much doubt and disarray among the ranks.  Despite an unexpectedly great sales quarter for the division, it cast a black cloud over all their business.

Fortunately, the dispute has now been settled.  Both companies announced an agreement Tuesday, freeing Mark Papermaster to assume his role as Apple's head of the iPod and iPhone divisions.  His official title will be senior vice president of devices hardware engineering.  He will officially start April 24.

Neither IBM nor Apple was willing to give specifics on what the settlement entailed.  IBM would merely say that the settlement ensured the protection of its intellectual property.

Mr. Papermaster will submit to monitoring by a New York federal court, which will last until October 24, 2009.  In July and October he will have to certify "that he has complied with his legal obligations not to use or disclose IBM's confidential or proprietary information."