Apple rivals wield anti-compete lawsuits to fight executive flight
By Jacqueline Emigh | Published November 1, 2008, 12:20 AM
Apple's competitors are trying to enforce non-compete clauses in court as a way of preventing executive talent -- and maybe valuable intellectual property -- from flowing in Apple's direction.
At least two high-level industry executives hired away by Apple lately have beem slapped by ex-employers with charges of breaking non-compete pacts. Mark Papermaster, sued by IBM this month, follows Michael Fenger, who got hauled into court by Motorola in July.
IBM is now trying to stop Papermaster, a Power chip and blade server guru, from taking a job as a technology advisor to Apple CEO Steve Jobs.
Motorola reacted less immediately, filing its suit against Fenger in Illinois fully four months after the former Motorola mobile phones exec started his gig as Apple's VP of global iPhone sales.
Meanwhile, in the US District Court for the Southern District of New York, IBM now argues that as one of 300 members of IBM's "elite Integration & Values Team," Papermaster is "privy to a whole host of trade secrets and confidences" related to IBM's development of processor and server products.
According to IBM's complaint, Papermaster resigned from IBM on October 21, saying that his job at Apple would start in November. IBM lawyers contend that Papermaster's plans run counter to non-compete terms in his IBM contract that prohibit him from working for competitors for a year. Papermaster is also banned from soliciting other IBM employees to move to a company for a total of two years, the court document said.
As for Fenger, Motorola's suit alleged that he received "millions of dollars in cash, restricted stock units, and stock options" in return for inking an agreement not to work for a competitor for two years after leaving Motorola. The Motorola case purported that Fenger "cannot perform his duties for Apple without inevitably disclosing Motorola's trade secrets." In February of 2008, the month when he did leave Motorola, Fenger sold his home in Boca Raton, FL for $3.2 million, according to an article in the real estate journal BlockShopper. Fenger then started his new post at Apple in March.
Motorola took Fenger to court in July, during the same month as Apple's launch of the pioneering iPhone 3G and App Store.
Meanwhile, Apple is rumored to be eyeing Papermaster's knowhow for projects ranging from enterprise-class server hardware to Power processors for small devices.
??? These clauses are nothing new. I have seen them for at least the last 10 years in my contracts, what's the big deal?
Obviously a company does not appreciate dissemination of IP, which has been created during their paid time and on resources they own...
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|They aren't at all. What 'we' need to see are the specifics of the contract and the specific compensation.
And that is what the court will determine.
Such arrangements have been used in an overly broad manner in the past and they have faced stiff difficulties in being enforced as they are generally far too broad in scope.
And at this point we know nothing of substance that allows anyone to make any observation other than that like yours regarding the historical use and the historical difficulties such arrangements have faced.
Had this been in reference to any other company aside from Apple, this thread would have been panned.
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|I agree on all points. For once ;)
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|What is interesting to note, is why 'so many' in secure positions are jumping to Apple.
That insight would be much more interesting to read about.
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|Non-Compete Contracts
Marshall Tanick
Non-compete agreements are becoming an increasingly popular way for employers to try to limit employees and former employees from working for a competitor, or from divulging trade secrets or other proprietary data.
Contrary to common misperceptions, courts will uphold non-compete clauses if they comply with acceptable standards. Enforcement against an employee can be both by damages and by an injunction that prohibits the employee from engaging in conduct that violates a non-compete clause.
An employer also can be held liable for hiring an employee who violates a non-compete agreement with a previous employer. In some cases, employers can recover damages from both the former employees and their new employers who collaborate with them in the transgressions.
However, some states impose substantial restrictions on the enforceability of non-compete clauses. In California, for example, they may not be enforceable at all. In New York, their enforceability is quite limited.
Most non-compete agreements are entered into with little, if any, negotiation between the employer and the employee.
They usually are signed at the outset of an employment relationship where the employee may have very little bargaining power and when the employee is generally not too concerned about limitations on future employability when beginning a new job.
But when an employee decides to leave a job, the non-compete agreement may be a significant impediment to future employment or may prevent employees from becoming self-employed.
Although the laws differ from state to state, general principles apply to non-compete contracts in most jurisdictions. Here are some considerations to keep in mind:
* Rule of Reasonableness: In order to be valid, a non-compete agreement must be reasonable. Courts recognize that employers have a legitimate interest in protecting the time, investment, and other resources they have invested in employees, but that interest must be balanced against an employee's job mobility in a free enterprise system. Courts generally will scrutinize non-compete agreements carefully to make sure that they are geared to protect the reasonable business interests of an employer without unduly limiting an employee's other work opportunities.
Therefore, these arrangements must usually be tailored narrowly to restrict truly competitive activities without forbidding an employee from working in the same industry or profession in a way that is not competitive.
* Independent Consideration: In many states, a non-compete agreement is valid if entered into at any time after an employment relationship begins. But in some states, courts will not enforce non-compete agreements unless the employee gets what is termed "independent consideration" - in other words, if they get something in exchange for signing the agreement.
If this principle applies in your state, a non-compete agreement will be valid only if it is signed at the time employment commences, or at a later date if the employer gives you some additional benefits such as increase in salary, promotion, or other items of value.
* Duration: In order to assure that these contracts are not too stifling, courts will generally require that they only last for a limited amount of time. The duration depends upon a number of circumstances, including how long it will take to train another employee to take over the position being vacated.
Generally, non-compete agreements one or two years in length will be valid, and longer time periods may be suspect. Courts generally will permit longer non-compete periods in connection with a sale of a business when a new buyer insists that the old owner refrain from competing for a prescribed period of time. In these situations, courts reason that the parties should be permitted to negotiate whatever time frame they want since the exchange is less coercive than it is in an employer-employee relationship.
* Distance: In addition to duration, a non-compete agreement often must have reasonable geographic limits. In today's global economy, the distance factor is less significant than it has been in the past. But if an employer has a particular market area, courts may refuse to enforce non-compete agreements that extend beyond that.
For instance, a cosmetology business that draws most of its customers from a radius of 10 or 15 miles probably couldn't limit a former employee from working in the cosmetology business outside of that market area.
* Blue Pencil Rule: Many courts follow the "blue pencil" rule, which means if an agreement is too restrictive, the courts can modify it and then enforce it. But in some states, the "blue pencil" rule is prohibited, and courts must either uphold non-compete agreements as drafted or invalidate them entirely.
* New Employer Liability: In many states, employers who lose an employee to a competitor in violation of a non-compete agreement can sue the new employer, as well as the old employee. In these states, employers are reluctant to hire away employees who have non-compete agreements. The best approach for employees in these states is to let their prospective new employer know about the non-compete so that the employer is not later "surprised" with a lawsuit by the old employer.
The new employer may decide that the non-compete agreement is invalid, or may be willing to assist the employee, including payment of legal expenses, in the event of a lawsuit by the former employer.
An employer should keep these principles in mind when hiring employees - both in terms of looking out for agreements that employees may have signed at their old jobs and with regard to negotiating non-compete agreements for their new jobs.
Such clauses can be a very effective way to protect valid business interests, but they should be drafted with the assistance of legal counsel in order to provide assurances that the language used will be enforceable.
Marshall Tanick is a partner with Mansfield Tanick & Cohen, a Minneapolis law firm that provides legal services to individuals, families, businesses and organizations nationwide.
http://labor-employment-law.lawyers.com/employment-contracts/Non-Compete-Contracts.html
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|read an explanation that recognizes a few of the more complex considerations other than your overly simplistic accounting that simply says 'yes, they can be used without question' nonsense and without anyone's knowledge regarding the enforceable scope of the agreement.
http://www.mbbp.com/reso...mployment/noncomps.html
But then, the name "Apple" was mentioned, so why in hell would such facts come into play when there are the myriad anti-Apple fanboys about.
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|I read that one too. So what ?
Unfortunately your addiction to your anger and resentments results in nothing but you turning everyone who engages in this thread into a target for your rage and insults.
How very boring.
You have no idea what my opinions and/or interests are with regard to anything regarding "Apple" or "PC" or whatever; and in fact the post was nothing more than somebody else's legal opinion concerning the issue of non-competitave clauses with regard to employment law.
But since you have anointed yourself the guardian and keeper of all things Apple here, and since your only recourse is to fling insults, then, by all means, please go right ahead.
'But then, the name "Apple" was mentioned..."
Which gives you the authority to flame everybody.
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|The facts are what?
Some companies have made allegations without stating any basis for their position other than secrets MIGHT be disclosed and the fact that Apple was mentioned.
We know NOTHING regarding the validity of the non-compete clauses. We know nothing regarding the compensation. We know nothing as to whether there is even a technology that would benefit Apple.
All we know is that Apple is mentioned, and the usual folks who rant against Apple appear (as in show up) to denounce Apple.
Non-compete cluases have been controversial for quite some time, and in MOST cases, even more difficult to effectively enforce.
So, what is germaine here?
The fact that Apple has been mentioned is non sequitur - it doesn't matter. Funny, we haven't heard one peep out of you regarding the mass exodus of MS execs recently! Ooops!
And do we know anything about the nature of the contracts and the compensation - aside from lots of fools assuming these guys were paid millions in return for the clause? Nope!
We know NOTHING except that there has been an allegation.
And thus far no one here has a basis to b!tch about Apple or anyone else, as they have no basis for their complaints. EXCEPT that Apple was mentioned!
So tell you what, when you get facts - ANY facts, then come back and b!tch about whatever is germaine to the scope of the charges.
And who cares what anyone thinks about Apple! It is non sequitur! The reference to Apple doesn't mean crap to a tree!
So give us legal opinions based upon facts not in evidence! Only fools such as yourself thinks that makes any difference! The alternative opinion expressed many of the criterion that must be met for them to be enforcable - MANY OF WHICH have historically proven not to be!
So what do we know regarding the specifics of the case? NOTHING! So, tell us Mr Wizard, what is your verdict based upon nothing?
Until such conditions based upon fact are presented you have nothing. Just an unsubstantiated allegation.
And it doesn't matter who the company is to which they are going! Despite so many stupidly running to b!tch about Apple. And because of my objection to this, pending more substantitated FACTS, some here call me an Apple fanboy! LOL!
And yes, to the degree that you and others have already reached a conclusion regarding the nature of the contracts based upon facts not in evidence and are rendering verdicts, all who do so ARE irresponsible idiots!
"So what?:" Indeed! That is exactly my point! Without specific facts regarding the contract and the consideration to substantiate the claims, all we are left with is a HUGE "so what"!
So, lacking any substantial facts, while you are querying legal theory, look up "kangaroo court", Captain Kangaroo.
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|People commenting here seem to have forgotten to read the part where these executives signed CONTRACTS and were paid huge SUMS OF MONEY, so they wouldn't jump ship for a set period of time after leaving the company. You're not even addressing the actual issue, rather, you're so blinded by your Apple fanaticism that you feel Apple is entitled to pluck any high level exec from another company and those execs can violate their contracts and keep the millions of dollars they were paid for their loyalty. Then there are the other usual suspects (hint: foxfyre) who seem to think they're smarter than the guys running these big corporations and have some sort of insight that allows them to make these ridiculous comments, like Apple not even needing the "talent" of these people. All those things are utterly irrelevant. If you signed a contract and took x amount of money to agree not to work for a competing company for y number of years, then you have absolutely NO RIGHT to complain. Take your millions of dollars and go sit on a beach or find another job until that time period is up. Simple as that.
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|Who gives a F#$%@ who the company is? Apple isn't plucking anyone any more than companies have been plucking MS execs who have been jumping ship in record numbers!
The larger issue of non-compete clauses has nothing to do with who the company is. And Apple would be just as stupid if they were griping about it.
What is hilarious is that this action only seems focused at Apple - despite MANY top execs in the companies mentioned, as well as others, doing the same thing.
The (il)legitimacy of non-compete clauses has been a hot topic for many years now - far more than your obvious lack of experience indicates.
And I am glad you just became aware of them.
Millions of dollars huh? You don't have to make millions in order to be covered by a non-complete clause! These extend all the way down to simple techs, but then I guess you know this. And you know for a fact that these individuals were paid millions of dollars specifically for consideration to satisfy the non-compete clause? Or, as it is evident by your assumptions, you obviously DON'T!
Your assumptions are as asinine as your usual tripe. Yeah, non-compete clauses only extend to millionaire execs. What an idiot! But at least you are consistent!
And as usual, this is the flake whose source of all things evil is the US.
Ironically, this is exactly equivalent to what Intel is accused of doing with vendors relative to AMD in Europe. And the courts are up in arms regarding the practice.
Yup, and as the dope above always disagrees with Apple as well as with any US corporation exec, he is free to chastise me for disagreeing with various execs - including the one with whom I MOST often disagree - the one who just happens to be Steve Jobs. But he also thinks I am an Apple fanboy. Oppps!
Yup, those techs should also take their millions and sit on the beach. And with any luck they can avoid stepping on the gelatinous carcesses of you and your cousins as they wash onto the beach.
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|So one might ask, are the competitors successful because of the ideas these people brought to those companies, or are the individuals effective simply because of the knowledge gained at those companies.
If it is the latter as maintained by these companies seeking restraint, the people don't matter - which is fundamental to their original claim - and that greatly diminishes the credance of their position.
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|The problem seems to be that these former employees are likely to leak trade secrets to their competitors (and they signed an agreement not to work for the competitors for a period anyway).
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|Then if the technology is ACTUALLY employed, sue!
So you limit particular behavior - such as the disclosure of trade secrets - just as they followed when actively employed at the company, not the right of someone to work. After all, they were equally able to disclose secrets while employed there as if employed elsewhere. Physical restraint is not the primary method that is most effective!
So in the mean time you effectively have a slave who cannot work for anyone else!
Just out of curiousity, where did these companies get their employees? Do they only hire directly out of school and only those who have not interned or coopted in industry?
Or maybe from their own company run nurseries?
Gee, of course not!
Then make the working conditions so attractive that they will not want to leave.
White slavery is - at least in theory and as long as you are not in Europe where the trade thrives - illegal.
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|Yeah, as if Apple's problem is a lack of novel innovative ideas?
If anything, the fear should be Apple's as they are consistently achieving that which their competitors only wish they could. After all, who is following who in the realm of technological innovation?
The only thing Apple lacks is an open expansive strategic marketing strategy as opposed to Jobs' paranoid fear that their products can't cut it in the open market without proprietary limitations. That is the real shame.
Like with Castro and Cuba, we can only hope for regime change sooner rather than later!
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|Honestly, I think this just hurts Motorola and IBM. As a person in the IT workplace seeing this, i would never work for them if i am subject to this type of treatment. Sure, they signed an agreement, however, personally, if I had to sign something like that i would not work for the company. It would mean that you would have to not work for a year or two or find a totally different career for 2 years if you wanted to leave the company. If Those companies (IBM and Motorola) are so worried about information, they should be better employers... they need to ask themselves why the employee wanted to leave in the first place and make changes to improve those employees satisfaction and keep them with their company.
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|"Yeah, as if Apple's problem is a lack of novel innovative ideas?"
obviously you are confusing apple's success in consumer products (toys) with enterprise level offerings.
i will offer kudos to apple in that they have finally realized that there's only so much to music (ipod) and video players (iphone).
apple hiring a blade specialist seems to me to be a lot like mcdonalds hiring a chef from the michelin guides.
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|LOL!
Hey Tool, we have another one who wants to discuss ENTERPRISE issues!
Look genous, I routinely get flamed for attempting to discuss MS and Apple in terms of the ENTERPRISE perspective, and no one is more critical of Apple in this regard than I have been!
Despite Apple having one hell of a potential Enterprise footprint with OSX aside from the fact that Apple's busines and support methodology is anathema to the Enterprise!
OSX server offers a lower TCO and greater capabilities both to effectively straddle (without terminal emulation) the 64bit UNIX (AIX/HP-UX) back ends and the complete admin of real or virtual Windows and/or Linux and Mac desktops (and yes, with VMWare, you can create OSX virtual machines!) with NO LICENSING than any Linux or Windows installation can - at MUCH LESS COST!
Ironically, Apple aggressively entering the Enterprise space represents one othe the greatest lost opportunities that Apple has heretofore ignored. But their challenge is not blade technology - blade technology is relatively simple as they are simply Intel based!
Apple's challenge is to figure out how to augment and support the Enterprise without telling the Enterprise how to run their business! And that is a Problem Apple has due specifically to Steve Jobs! Just as the consumer space continues to suffer because of his anal control freak mentality - and NOT because of any lack of capability of OSX or their servers (which ironically kick @ss in regards to their price/performance ratio and efficient cooling which allows much greater packing densiies than the competitors which cannot be close-racked due to heat dissipation/cooling issues) The only gripe you can level against them is the lack of a truly redundant PS)!
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|... and your point about innovation?
seems like you've cited a lot of "me-too" accomplishments. "GENUOS"!! (sic)
it's strange that you blame steve jobs for their lack of market share... period... yet, it is probably ONLY his vision that has sustained their single digit market share.
apple simply will never be a relevant enterprise environment... except maybe publishing and academia.
until the uncouple their hardware/software ecosystem, they will be niche with a few feathers.... that's it!
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|And one wonders what your point is aside from the one atop your head - which if you comb your hair right...
Me too acoomplishments with regards to innovation? Yup, like Apple needs addition development help with Power technology. The fact is, except for the cell, Power7, reportedly to be Opteron socket compatible, offeres them little as they have signed on to be an exclusive Intel shop in the PC and server markets. And basic implementation information regarding their use is not guarded at all! In fact, IBM , like Intel and AMD makes this readily available as they actively court users!
Yup, I hold Steve Jobs accountable for their strategic marketing plan - which has resulted in the lack of independently releasing OSX and in refusing to design machines that suit what the market wants rather then simply telling his client base what they will get and what they will do with them.
And you obviously failed to attend the VMWare World expos where the it was amazing to see just how many admins of mixed UNIX/Windows environments appeared wanting support for OSX, allowing for the servers and workstations to serve as a commmon bridge fascilitating an integrated UNIX/Windows environment allowing complete admin of remote mixed environment desktops and servers from one point without licensing.
Yup, ole Steve's vision has certainly expanded their penetration of their computer hardware into new markets! LOL! There growth unfortunately has been limited primarily to folks who are buying the machines to run OSX and Windows, capturing a miniscule percentage of the Windows market - simply so they can still run Windows along side OSX.
So all Apple needs to do now is to market a blade featuring the same asinine proprietary arrangement as the rest of their lineup. And that will get them where exactly? What, and they are going to start with a (16 core (minimum!) Power7 chip running AIX? Right!
Without a major reorientation of their product mix and the establishment of a viable enterprise support section - things already repeatedly mentioned in MANY threads, they won't matter. And its a shame too, as they certainly could. But the fact is, the world doesn't need a new blade source - others already design with greateer economies of scale. What they need is for an OS that can straddle the 64 bit UNIX backend world and a heterogeneous desktop - an enveironment that already exists in OSX server. Now just let it run on other machines! And THAT IS Jobs' fault.
And then YOU turn around and complain that they will never grow larger until they uncouple their OS and their hardware - exactly the point I have repeatedly made - which is the direct result of Steve Jobs' anal control!
Not to mention the fact that Apple has no enterprise support structure.
Ironically, Apple could stand to do a large business in the enterprise segment with their existing server line IF they address the issues mentioned.
So I am sure you had a point - somewhere - where you disagree with me only to reinforce the very point I have repeatedly made.
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|lol, I have to ask, did you remember to breath while typing that out?
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|Actually I had plenty of time to breath as I was waiting for the others in the thread to begin thinking.
...Thankfully I was not foolish enough to hold my breath waiting for that!
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|They can fight as much as they like, nothing or no one will stop Apple from technological dominance.
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|ROFL, Microsoft dominated a field once and they called it antitrust. I don't see Apple allowing Windows to run on their equipment or Apple OSX running on anyone else's equipment without a lawsuit. I think it's a sad joke.
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|Apple does allow running Windows on Macs, and advertises this fact aggressively. (Apple and Microsoft are not competitors, despite Microsoft accepting them as competitors. Apple makes hardware, Microsoft software, including software for running under Mac OS X.)
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|Where do get this crap? Do you make it up or do you have an equally idiotic source?
And Microsoft was never called "anti-trust". The anti-trust laws were used to manage what was legally determined to be a monopoly - a trust as they effectively prevented someone from sourcing a PC without having paid for Windows!
Yup, and Apple has sued to prevent folks from running Windows on their PCs or the older Macs...LOL! You ARE clueless! Welcome to the forum, you will fit in just fine with the rest of the Bozo fanboys.
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|Microsoft is the LARGEST Mac developer!
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|Apple and Microsoft are not competitors
Yeah, those "Mac vs. PC" ads were all Microsoft's doing from the beginning...
Remember the 1984 commercial?
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|yes. no one can stop apple.
they are the same age as microsoft... and have achieved a whopping 2% market share.
and has anyone noticed that gphone is selling WAY faster than iphone.... with a huge walmart deal landing any day.
yes... they are unstoppable.
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|Yup, the 1984 commercial that ran how many times? Just once! And then simply to announce the introduction of the Mac.
A better commercial would be Apple versus the Borg hiveship...and uploading a virus by the name of Windows to it and having it come to a clunking coughing choking backfiring wheezing stop aka a Model A. Unfortunately the Borg hadn't yet been 'invented' in 1984.
Except in 1984 the fanboys thought the limited OS called DOS with the limited command set literally copied from UNIX was all the rage...And the wonder continues.
And we shouldn't even mention the number of best of breed programs developed on the Mac that have become Windows standards, despite the original advantage claimed that DOS had umpteen mediocre alternative programs available to the Mac's best of breed. So how many of you are still using Lotus123 or Borlund?
{Edit: for fat fingered typos! Being reduced to using IE from firefox (as installing Comodo has killed printers in Firefox! How do you get that crap off! The last time I take advice from one 'friend'! ;-) is hell! IE functionality from dnld management - are you sure? are you sure? are you sure?, to the lack of process control, lack of spell checking, lack of effective pswd management - and the list goes on! You literally take the advantages of FF for granted! Not to mention I feel like I am inventing a new language or a new cyptographic standard in the form of a one shot key! Ouch! IE sucks. Its pretty bad when the only thing one can find useful in IE is the display scaling function in the lower right hand corner!}
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|Yup, the 1984 commercial that ran how many times? Just once! And then simply to announce the introduction of the Mac.
Are you arguing the point of my response (against the dolt who claimed "Apple and Microsoft are not competitors"), or are you just going off on yet another one of your completely irrelevant tirades?
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|lol...sorry, just seems Fox needs some valium on this thread.
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|Nope, simply amplifying a few point in response to the dolt.
And for the responder preoccupied with bodily functions and drugs, at least he didn't attempt to offer any substantial insights or suggest that Apple is a monopoly....
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|