BY VIN MCLELLANFriday The 13thThe call came from IBM offering Martin Alpert a deal that could givehis company a lock on its market. But he wasn't celebrating.

he date loomed large on Dr. Martin Alpert's calendar. He was president o�f Tecmar Inc. , asmall computer company in Cleveland and on Friday, the 13th of August, 1982, he had ameeting scheduled -- a meeting that could shape his company's fortunes for years to come.

The man he was supposed to see was one William Erdman, an IBM Corp. executive serving asthe front man for a group of IBM renegades who were peddling product designs for variousdevices that could be added on to an IBM Personal Computer, thereby increasing its powerand versatility. As it happened, Tecmar was in the business of making such so-calledperipherals for the PC, and Erdman had asked for the meeting to give Alpert a crack at thedesigns.

Under other circumstances, this might have been cause for jubilation, but Alpert was notrejoicing. On the contrary, the whole deal made him nervous -- so nervous that, onWednesday, he suddenly decided to cancel the meeting.

Alpert had good reason for concern. For one thing, the renegades wanted big bucks for theirwares. Prices of $15,000 to $150,000 had been mentioned, depending on the complexity ofthe design. With two or three dozen designs on the block, that could add up to a lot of moneyfor a small, cash-tight company. But if Tecmar couldn't come up with it, somebody else surelywould, and Alpert couldn't a�ford to let such a bonanza fall into the hands of competitors.

But, beyond all that, there were deeper issues involved, for these were not your ordinary,run-of-the-mill, high-technology renegades -- adventurers from the mother ship setting outto test the waters of entrepreneurism on their own. Indeed, they were still employees of IBM.Granted, they said that they planned to resign in the near future. They also said that they haddeveloped the signs on their own time. Yet the fact remained that they were sellingIBM-related products from inside Big Blue. "The implication was that there were secrets forsale," Alpert said later.

So what was he to do? If Alpert went ahead with the meeting, he risked becoming involved ina conspiracy that would inevitably invite the wrath of IBM itself. If he simply backed o�f andkept quiet, his competitors would do him in.

On Thursday morning, Alpert took the next step, placing a call to IBM headquarters inArmonk, N.Y. And that was when his troubles began.

Over the course of the next three weeks, Martin Alpert became, in e�fect, an undercover agentfor IBM. His world was �illed with clandestine meetings, hidden tape recorders, anddebrie�ings in hotel rooms. Along the way, he emerged as the central �igure in an elaborate"sting" operation masterminded by IBM security agents to trap a group of high-levelemployees, including, Alpert later learned, some of the best technical minds in the industry,men of whom he himself was in awe.

A�terwards, many IBMers claimed that this case had a far greater impact within thecorporation than the better-publicized Hitachi espionage case, which blew up in June 1982. Inthat episode, Hitachi Ltd. of Japan paid some $600,000 to an undercover team of IBM andFederal Bureau of Investigation agents for stolen IBM plans. But those were hugecorporations grappling for a wrestling hold. The Tecmar/IBM case is writ in more humanterms, shaped by more intimate, personal acts of betrayal. And while IBM used the Hitachicase to issue a warning to other companies, foreign and domestic, the Tecmar case constitutedIBM's warning to its own employees against renegade fever.

This is not, however, a story about IBM, nor even about renegades and betrayals of trust.Rather it is a story about the president of a small company who became a chess piece on a vastplaying board, fending for interests much larger than his own. "The basic decision was thatwhat was going on was wrong," said Alpert when it was over. "The second decision was not toparticipate. The third decision was to notify IBM -- and then, where do you stop from there? Idon't know . . ."

Such questions came later, however. Back on August 11, only one thing was clear. Friday the13th was going to be an unlucky day.

Martin Alpert is an energetic dumpling of a man -- at 34, he is both a medical doctor and asystems engineer, as well as president of what he describes as the fastest-growing company inOhio. The only son of two Nazi concentration camp survivors, a wunderkind in bothacademia and business, he has a curiously di��ident manner that does not quite conceal histense, speedy energy. With his wife, Carolyn, who has a master's degree in management,Alpert founded Tecmar (the name is an abbreviated �lip on "Marty's technology") in 1974 --

while he was still in medical school -- to develop diagnostic medical tools based on his ownmathematical models of the human pulmonary system.

By 1979, Alpert was a resident at Cleveland's University Hospitals, still doing medicalresearch, when he discovered that there was an eager market for the analog-to-digitalconversion circuit Tecmar had developed for its own research. As Alpert later noted, thepersonal computer industry had been born in the mid-'70s, and he "just happened to bestanding there when the train went by."

In the fall of 1981, another big train appeared in the form of the IBM Personal Computer.David Wertman, Tecmar's vice-president for marketing at the time, bought the �irst two PCssold to retail customers, and Tecmar soon surprised everyone in the microcomputer industryby displaying 25 add-on devices -- each a special-function unit tailored to the circuits andconnectors of the PC -- at a November 1981 trade show. Even IBM was quotably impressed.

"Ah, but we've told some wonderful fairy tales about how we tore apart those �irst PCs and�igured out the specs we needed," says Wertman with a chuckle. The truth, he admits, is thatTecmar's shrewd planning was aided immensely by the early acquisition of a pirate copy ofthe PC's technical reference manual -- about a month before it was legitimately available toother third-party vendors. "It just sort of landed on my desk one morning," he says with agrin.

Tecmar leveraged this great good fortune into advance sales and headlines, taking an earlylead on the dozens of eager companies that crowded into the PC third-party arena as IBMbegan to pace the explosive growth of the personal computer industry. IBM is now estimatedto have at least 26% of the entire market, while other micros designed to mimic the IBMmachine (so as to use PC programs) have another 17%. Of course, the Lilliputian third-partyvendors of PC add-ons occupy only one corner of this huge market, but add-on sales seem todouble annually, so even the corner feels big. Alpert estimates that the 1983 market for PCadd-ons will be $150 million retail. "We've seen it go from a business to an industry in just acouple of years," he says. "We've aIso seen it go from a friendly industry where I could call uppeople who had written so�tware and ask for help. Now, the stakes are so high, none of thathappens easily."

Within this arena, Tecmar has done quite well for itself. Its competitors estimate its sales atabout $8.5 million for the 12 months ended June 30, 1983, and expect them to reach $14million during the next year. But, even so, Tecmar is only one relatively large gnat in theswarm of third-party PC peripheral vendors that buzz around IBM's $34.4-billion mountain,

and -- like the others -- it tends to regard IBM with fear and apprehension, as well as awe andrespect. The contrasting scale has contributed to a peculiar industry mindset, whereinvendors actually expect IBM to step in and squash them when the pro�its justify it.

"What they have done," says Wertman, "is let the third-party people support them, developthe market, and do the market research to �ind out just what kinds of little products reallymake sense. They let them �ill the void until IBM gets around to rotating that big gun on topand announcing: 'OK, now we'll take a piece of that back!' We just hope IBM doesn't take it all .. ."

Given this environment, it is easy to understand that a friendly call from a senior IBMmarketing executive would be a major event at Tecmar. That call came in early July of 1982,and the man who placed it was Bill Erdman, O��ice Systems product-line manager for one ofIBM's two international marketing groups, World Trade Americas/Far East Corp. , and an18-year veteran at Big Blue.

In the beginning, at least, Erdman seemed the soul of curious innocence. IBM wanted generalinformation on Tecmar's new products, he told Wertman. "I just want to make sure we getinformation as soon as everybody else. I don't want to have to wait for a press release."

But it did not stop there. Over the next six weeks, Erdman telephoned Wertman, whom hehad never met, perhaps 15 times. He tipped o�f Tecmar when IBM made a key presentation oncommunication-network standards at a little-noticed industry seminar. He had a dozeninteresting, helpful observations on the state of the market. He even bought a Tecmar diskmemory and expansion cabinet, and suggested modi�ications.

Suddenly, Tecmar had a Godfather.

Wertman was delighted. Alpert, too, soon developed an appetite for Erdman's tips and hintsabout IBM's plans. A�ter all, when you dance between the legs of a rogue elephant, advancenotice of which way the beast will turn can be priceless.

Then, around the beginning of August, Erdman made clear the nature of his interest inTecmar. The pitch came in like a slow curve ball. He was planning to quit IBM, he toldWertman. He and a few other IBMers -- senior people, capable people -- were thinking ofstarting their own "third party" company to design and market add-on devices for the IBMPC. They were looking for venture capital, he explained, but, since they had already designedabout 40 products for the PC market, they were also interested in selling or licensing some ofthese designs to an established company like Tecmar. There was potential for a long-term

relationship.

Erdman stressed that the whole deal was clean and proper. "These products were developedon our own time. IBM has no recourse on us whatsoever." Wertman says he respondedcautiously. These products were clearly from within IBM, so he had to tread carefully. YetErdman was so open, so bold and brash that, when he o�fered to come to Cleveland, Wertmanadvised his boss, "If it's not illegal, and he's talking everything all over anyway, you probablyought to get what information you can . . ."

Alpert was inclined to agree. "My initial reaction was, 'Well, it won't hurt to talk to the guy," herecalls.

The ethics of the situation were not, in fact, clear at that point. A�ter all, the "spino��" traditionis well established in American high technology. From the very beginning, renegade ventureshave seeded the expansion of the computer industry, whose history reads like the bloodlinesof Genesis: Sperry Rand begat Control Data; Control Data begat Cray Research; IBM begatAmdahl and Storage Technology; Digital Equipment begat Data General. Many a competitorhas been born around the o��ice co�fee machine. "Historically, in this industry, ethics iswhatever you can get away with," notes Alpert. Granted, industry standard employmentcontracts usually claim everything but the sweat from the brow of an employee as property ofthe employer -- but there is a lot of �ine print in the varied state laws and much confusionabout the nature of intellectual property in the so-called knowledge industries.

And, legal issues aside, there were other concerns, says Wertman. "[Alpert's] major concernseemed to be, 'Can I a�ford it? And if I can't a�ford it, do I want anybody else to have it?' " herecalls. "There were a lot of discussions on that, agonizing on it from di�ferent perspectives . .."

In any case, Alpert and Wertman agreed that they should go ahead and meet with Erdman.Only when they knew whom he represented, and what he was selling, could they judge thelegal, and political, di��iculties involved. Wertman says that no one suggested contacting IBM.He himself didn't even think of it.

So, on Tuesday, August 10, Wertman called Erdman and con�irmed the meeting set for Fridaythe 13th. At 9 o'clock on Wednesday morning, however, Alpert walked into Wertman's o��iceand told him to cancel the meeting. Uncharacteristically Alpert was unwilling to explainhimself.

Wertman called Erdman to cancel the meeting but he was totally confused. "We think you are

probably some good people to talk to," he told Erdman, "but we really have to do somesoul-searching . . ."

Erdman urged him to hurry; other companies were already dickering. "He had just talked toPractical Peripherals," recalls Wertman. "He had just gotten back from Georgia so he had seenHayes . . . and he was on his way to see Xedex." The hint of an auction reassured Wertman. "Myassumption -- a little naive, I guess -- was that if he's waving all this stu�f around and none ofit is in a plain brown wrapper . . . well, then, there shouldn't be any real problems with thisstu�f."

Wertman told Erdman he would be in touch and hung up, then reported the conversation toAlpert. The renegades, however, were not about to let things lie. Later that day, Erdman calledWertman back to hype the sale -- and, for the �irst time, described some of the productdesigns his group could provide. "I think their impression was that what they had to o�fer wasso lucrative that anyone would have to be stupid to consider any alternative other than towork with them," Alpert later remarked. "And what they had to o�fer would have been very,very lucrative. There is no question to that."

Indeed, the renegades were selling a capability to encroach upon one of IBM's gold mines.Erdman described two products that would allow the IBM PC to "emulate" IBM's 3270-familyof coinmunication terminals, the backbone of IBM's installed base of computer-linkedterminals.

At the time, 3270-emulation was the most eagerly sought product in the PC market, and the"translator" could be revolutionary device, or so Wertman believes. The hard part of using amicro is the drudgery of typing data into the system -- data that is o�ten being stored in amainframe elsewhere in the same organization. 3270-functions would allow PC users todownload a section of a database from the mainframe, store it on the PC, and play with it. "Ihad been beating on Marty for 10 months that we ought to be working toward that product,"says Wertman with a sigh. Perhaps Tecmar's need for such a program was apparent toErdman.

In any event, Alpert got the message, relayed through Wertman: If he did not buy the 3270products, he would have to compete against them.

Wednesday into the night, Alpert and his wife argued about business realities and businessethics. For reasons of their own, they did not include Wertman in their discussions, but theydid call on Tecmar's corporate counsel and their insurance broker. Together they wrestledwith the pros and cons of warning IBM. "It was [a] much more di��icult decision" than the one

to cancel the meeting, says Alpert.

His fear was that he might be dealing with a "bunch of IBM insiders, with access to all of IBM'sinternal resources and long-term planning, who were making a private e�fort, while still IBMemployees, to attack and control the PC add-on business." Although they worried about therisk of an industry backlash, Alpert's "kitchen cabinet" all agreed with his decision to blow thewhistle. "We always knew there were negative things associated with it," says Carolyn Alpert."But we also knew it was what we were going to do."

On Thursday morning, August 12th, Alpert called IBM headquarters and le�t a message askingIBM's president to call. On Thursday a�ternoon, IBM senior vice-president John Akers -- soonto be named president -- returned his call. "I'm not sure this is all that bad," Alpert began, "butmaybe you should decide . . ."

Early on Friday morning, the 13th, two men showed up at Tecmar's Cleveland o��ice: RichardMainey, director of security for IBM's information systems group, and Gerald Blaine, one ofthe handful of IBM agents -- or corporate senior security counsultants, as they are called --who work for Nicholas de B. Katzenbach, IBM general counsel and former U.S. AttorneyGeneral. "IBM moves, when so motivated, with incredible speed," says Alpert.

Alpert describes the two as "very professional -- coplike, clean-cut, heavyset. Blaine, a formerNew York City police detective, was the senior man; Mainey was chief security o��icer for theIBM group that managed the PC product lines.

At this point, Alpert was keeping Wertman in the dark -- at IBM's request, he later explained."Suddenly, these two guys show up," Wertman recalls. "Big, good-looking guys, very nicelyattired: wing tips [and] gray, two-piece suits. They could have been investment bankers. Theywere given an o��ice, and they were making a lot of phone calls. So I went in and said, 'Marty,what's happening here?" Alpert told Wertman that the two were venture capitalists reviewingTecmar's �inances.

But Wertman couldn't help but notice that they never asked for the company books. "Theseguys were just sequestered in their room, and they're back and forth between their room andMarty's o��ice . . . for two days, all day. They go out for lunch right on time, but the rest of thetime, it was almost like one guy would be on the phone, and the other guy would be leaningover to listen." A�ter one of Tecmar's junior programmers mistakenly assumed Wertman knewwhat the engineering vice-president had con�ided to him, Wertman angrily confrontedAlpert. Why wasn't he told? Wasn't he trusted? Of course, Marty temporized, it's just thatIBM . . .

(Wertman would never forgive or forget the lie; his voice carried wry bitterness when hedescribed the incident many months later. Wertman le�t Tecmar in November, a�ter beingrefused equity he thought he had been promised. There was much rancor in the parting, butWertman traced the breakdown of trust between them to Alpert's lie on Friday the 13th.)

Meanwhile, the IBM agents were working in a near-vacuum. They did not know who or whatwas involved. They also had to worry about how such a conspiracy, and the company's inquiryinto it, would later appear to the courts and to other IBM employees. The corporate role had tobe passive, if that was possible. IBM would write the script, coach Alpert for every scene, prephim, and debrief him -- but the renegades had to hang themselves.

The �irst step was to reestablish contact. On Monday, August 16th, Alpert called Bill Erdman'sStamford, Conn. , home on a telephone hooked up to an IBM tape recorder. Tecmar wasinterested in his "exciting" proposal, he told Erdman, who responded with a bold display ofinsider information. He talked about a number of follow-on products for the PC, which IBMplanned to develop or announce in the near future. "He described some of the design featuresof those products and the market opportunities presented by them, and how he and hisassociates were prepared to take advantage of those opportunities," says Alpert, who declinesto give details because of his uncertainty about what belongs to IBM and what does not.

Erdman warned him that "until someone wants to pay the right price," all negotiations were"nonexclusive," and he would continue to talk to Tecmar's competitors. Erdman also talkedabout his most prominent associates, whom he described as two men among several currentIBM employees "ready to roll out of IBM." His hardware expert, he said, had "personallydesigned the IBM Personal Computer, the IBM Displaywriter, and the System 23/Datamaster"-- the spine and ribs of IBM's small-computer business. His so�tware expert was a 10-yearIBM veteran, currently working on PC so�tware development, and a specialist in IBMcommunication protocals.

Alpert and Erdman agreed vaguely to talk again soon and hung up, but the report of thediscussion lit fuses at IBM, and Alpert -- at IBM's urging -- called Erdman again the followingday to push for a face-to-face meeting. Alpert let Erdman know how impressed he was withthis talk of IBM's unannounced products; Erdman noted that it was just "some �lavor" of whatwas available. When Alpert said he would be in Atlantic City for a trade show the followingweek, Erdman invited him to his Stamford home on Monday. Then, at IBM's prompting,Alpert asked Erdman about the renegades' plans to exploit IBM trade secrets and planningdata.

According to Alpert, Erdman said that he himself had "access to some of IBM's highest-levelbusiness plans," and "already knew where IBM was going in the next couple years." Butbeyond that, said Erdman, his group had contacts all through the IBM PC organization.Keeping abreast of IBM product plans would be no hassle. "As we do our thing and build ourso�tware base, we'll be pulling o�f some of those people," Erdman explained. "We've identi�iedthe 14 key people associated with IBM's small systems and, you know, over a period of timewe've talked to them . . . If we build an organization, we'll be pulling those people with us asthe need occurs."

In the meantime, his group already had the brains that had shaped the PC line from conceptto product plans, Erdman bragged. "I guarantee you that we know more about the way IBM'sgoing to put [the PC product line] together than IBM knows," he said. The products he wasselling were speci�ically designed to compete with presently planned IBM products." He hadthe same products, further "re�ined," some of which "would be out on the street before IBMcomes out with them." Alpert duly impressed, con�irmed the appointment in Stamford, andhung up to talk things over with IBM.

"I was probably catching my breath through the whole thing, from day one," Alpert recalls."The thing that surprised me most was the kind of people involved." This was very quicklyexpanding into much more than he had bargained for. "We thought there would be one or twoconversations that he would have to participate in," says Carolyn Alpert. "I don't think we hadany sense of what steps and what time he would have to invest." She herself had to carry moreand more of Tecmar's management as her husband became engrossed in his undercover role."Marty really got into it," notes Wertman dryly.

IBM -- for its part -- was putting all its marbles on Alpert. It was desperate to �ind out howhigh the conspiracy went, who was involved, to whom else they had talked. The reports fromCleveland must have scorched the hallways in Armonk. "There was an awful lot of moneyinvolved," notes Alpert.

Erdman called Wertman one last time. "I appreciate your involvement," he told the Tecmarvice-president. "Whatever Marty's concerns were, we're in good shape now."

On August 23rd, Alpert parked his Avis rental car in front of Erdman's oceanfront home inStamford. There was no yacht in the slip out back, and Erdman's Ferrari was not visible, butAlpert recalls an aura of Gatsbyesque wealth. Erdman himself -- a "typical, handsome, IBMsalesman," says Alpert -- seemed to ooze charm and sophistication. Even his casual clothesseemed tailored, says Alpert with a laugh, and there is the faintest tone of impish satisfaction

in his voice as he describes blu��ing his way through Erdman's polished sell. Did he have themoney? Erdman asked. Could he just sign a check for $100,000? On his own, without anyboard of directors involved?

Erdman revealed that the renegades were incorporated in New York State under the nameBridge Technology Inc. Bridge was still negotiating with potential investors, and it was eagerfor a Tecmar bid. They discussed various deals that could tie a design �irm like Bridge with anestablished manufacturer like Tecmar, but Alpert insisted that he had to talk with the seniorBridge Tech engineers. Erdman agreed. Later, when Alpert pushed for evidence that Bridgewould be able to exploit IBM's future plans, Erdman showed him two volumes of IBMplanning documents: one for the IBM Displaywriter, the other concerning the PC. At least oneof the volumes was very plainly marked "IBM con�idential."

Erdman, the well-trained salesman, closed the session with the requisite low-commitmentquestion guaranteed to elicit a positive response. "Do you think you could enjoy working withus?" he asked, all bonhomie. Alpert says he nodded and smiled in response.

Blaine and Mainey, the IBM security team, were waiting to debrief him at The HelmsleyPalace hotel in New York City.

No doubt, IBM lost little time in obtaining the Bridge Tech incorporation papers; as it turnedout, they had been signed on June 25th, three days a�ter IBM security agents, workingundercover for the FBI, had sprung the trap on Hitachi in California. The new company'saddress was that of a White Plains, N.Y. , lawyer, who was also the only corporate o��iceridenti�ied. The document -- �iled in the courthouse around the corner from IBM's huge WhitePlains facility -- said Bridge planned to design, make, and sell devices that would connectcomputers to other computers and incompatible peripherals; create proprietary so�tware;and develop circuit boards that �it inside computers to give them new functions andperformance. Such a bold declaration, even as the daily headlines sang of IBMcounterespionage, suggested a certain amount of hubris.

Back in Cleveland, Alpert waited for Erdman to set up the big meeting, and he fretted. He haddi��iculty concentrating on business matters. "He was wired tight as a drum," recallsWertman. "That spy-story stu�f. He really took it to heart." When the two talked of IBM andBridge Tech, says Wertman, Alpert would "close the door, open it again to see if anyone wouldrun right up to put an ear to the door, then close it."

Counterespionage aside, the Alperts were also worried about an industry backlash. " [Thatwas a] source of a great deal of stress. . . . We were certain that it wasn't going to help us as

much as it could potentially hurt us," says Carolyn Alpert.

Working with IBM seemed to have become a bet-your-company proposition. Alpert agrees hewas probably showing the stress. "This was rough-time stu�f all throughout," he says, hisvoice weary with the memory. "This was all really tough."

Erdman called several times, �inally arranging to bring his two star engineers to Cleveland onSeptember 4th, the Saturday of the long Labor Day weekend. Alpert was nervous. There wasan air of climax about this meeting. Friday a�ter work, he met with Blaine, one of the two IBMsecurity men, at the Tecmar plant. Blaine handed Alpert a miniature tape recorder. On hisdesk, they set up a long-playing recorder, built into the frame of a tan leather briefcase. Atouch to the burnished clasp, and the tape would begin to roll.

Blaine speculated about the engineers. One -- he believed -- was a senior engineer by thename of Eggebrecht, the leader of the 12-man team that had come up with the �inal design forthe PC. He thought the other was probably a so�tware specialist from Yorktown Heights, N.Y. ,named Stearns, who managed a PC applications research team. "They were the most likelycandidates," recalls Alpert, "but I think [that], until everyone saw them, there was signi�icantdisbelief." These were men of great prestige and authority within IBM, big game for anamateur spy. Alpert did not sleep that night. On Saturday morning, he rose shortly a�terdawn.

With his tiny recorder in an inner pocket of his new blue suit, Alpert met Erdman and the twoother men at 8 a.m. , in the co�fee shop of the Sheraton Hopkins Hotel at the Cleveland airport.IBM had guessed correctly. Erdman introduced Lewis Eggebrecht and Peter Stearns. Overco�fee, the two engineers talked about themselves and described their work at IBM.

Eggebrecht, a senior engineer in IBM's System Products Division, was a slender, 14-year IBMveteran in his late thirties whom IBM later described as the "chief architect and lead systemdesigner" for the IBM PC. Eggebrecht told Alpert that he had personally designed "about 90%"of the PC. As head of the PC development team, he had reported directly to IBM chairmanFrank Cary. Eggebrecht was also responsible for the conceptual and engineering design of theIBM System/23 Datamaster, another desktop computer announced in 1981. For the past year,he had been the ranking consultant for the IBM engineering teams developing PC accessoriesand designing the new IBM microcomputer systems that would occupy market niches aboveand below the PC. He was also senior adviser to IBM upper-management, guiding them asthey determined future product technology and evaluated trade-o�fs between new PCfunctions and the revenue loss from other product-lines.

Peter Stearns, gray-haired and heavyset, the oldest man at the table, had helped foundInterdata Inc. He had been at IBM since 1975 and was now manager of architecture andtechnology in IBM's Communication Products Division at Yorktown Heights. Prior to that, hehad been leader of the development team at IBM's Thomas J. Watson Reseach Center, also inYorktown Heights, which explored future o��ice systems based around the PC and IBMword-processing systems.

It is, quite frankly, hard to imagine two men in a better position to betray their company. Ifsomeone at IBM came up with an idea for a new computer use, a new technology, a new way toprogram a PC for another function, the idea would sooner or later be seen by Eggebrecht andStearns. Research and development people went to them for advice; top executives soughttheir counsel.

As Alpert bundled the brains behind Bridge Tech into his white, '76 Oldsmobile, he had thedisconcerting thought that Eggebrecht and Stearns were the two most senior IBM o��icials hehad ever met.

Alpert took the three back to the plant. Normally, there would have been at least a fewworkers around, but he had made sure that the place would be empty on this particularSaturday. A�ter touring the production facilities, he led his guests to his tiny o��ice. Soona�terwards, Carolyn Alpert came in, introduced herself, and settled into her own o��ice next toher husband's, where she could overhear the entire conversation. The IBM security agentshad asked her to be present; they might need a second witness if the case went to court. Asthey began to talk, Alpert absentmindedly thumbed the clasp on his tooled-leather briefcase.

The meeting lasted for hours. Alpert says Erdman, the salesman, dominated much of theconversation, but Eggebrecht took control whenever the discussion moved into technical anddesign matters. Stearns was quiet. By the hour, the IBM tape recorders gathered evidenceshowing the extent to which Bridge Technology's business plan depended upon IBM secrets --which proposals had originated in IBM development groups; which products were re�inedcopies of future IBM products; which IBM trade secret underlay this or that idea. Promptedby Alpert's queries, the renegade trio apparently explained how the Bridge Tech designswould exploit market opportunities recognizable only to those who knew exactly what IBMplanned to do when.

As talent, the two IBM engineers -- particularly Eggebrecht -- made a strong impression onAlpert. He notes glumly that Eggebrecht struck him as a man "who is just incrediblyintelligent, who started an industry revolution which . . . I feel privileged to be a part [o�]. . . .

His eyes lit up when he talked about technology."

At one point, Alpert says, he came right out and asked them why they were doing this."Eggebrecht and Stearns indicated they thought IBM was a great company, the best companyto work for, but they wanted to do things on their own." They wanted to be rich; to get one ofthe fortunes that others were making all around them -- "and I guess I can understand that.Here's Eggebrecht, who designed the PC, which is incredibly successful, and in his mind he'sonly got X number of dollars to show for that . . . And he was dissatis�ied, and that's too bad . .."

Months later, Alpert still becomes visibly agitated and upset when he talks about theengineers and the disaster that awaited them. Such talent, he insists, will again make asigni�icant contribution. Nevertheless, he walked both of them into the snare.

How could they be sure to get copies of all these IBM planning documents? he asked. "Well, letme put it this way," said Erdman, a man with a knack for phrases that IBM lawyers love toquote. "In some cases . . . you give it to your personal secretary, and she copies it. . . . I mean,something like that could exist. We certainly wouldn't know about anything like that, and wecertainly wouldn't have anything like that in our possession. If anything like that did exist, itwould be in some lawyer's possession some place so that it became client/lawyer privilegedinformation."

Alpert will not say what the renegade engineers told him about speci�ic product plans. With alaugh, he describes himself as trapped in the worst of all possible worlds -- full of incomplete(and sometimes incorrect) versions of IBM's plans, yet cut o�f from the rumor mill by theassumption of many in the industry that he knows all. Alpert's a��idavit did note a number offuture IBM products that were discussed at length: a PC "expansion cabinet," another microtailored to a speci�ic foreign market, and a medley of PC "follow-on products." Certainly, theso-called XT (an upgraded PC) and the rumored, less powerful Peanut home computer musthave been among them. Eggebrecht was in�luential in the design of both.

(Within IBM, however, word subsequently got around about the products that Eggebrecht,Stearns, and Erdman had been o�fering to the highest bidder, and people were not happy. Atone point, for example, Eggebrecht opened his briefcase and displayed a PC circuit board in anadvanced stage of development. Eggebrecht described it as a "prototype," which showed howfar Bridge had come in the development of its own 3270 PC product. The truth, according toseveral IBM sources, is that Eggebrecht was �lashing a 3270 PC board that had been"borrowed" from another IBM engineer.

One of Stearns's colleagues at Yorktown Heights later commented, "The guy was personableenough and popular enough that the reactions were at �irst rather mixed. What was it thatPeter was shopping around? Well, it was this guy's this, and that guy's that, and this girl'swhatever! It was their work! . . . It's pretty disheartening to have someone selling your workout from under you.")

Eventually, the meeting wound down. Carolyn Alpert joined her husband and the Bridge trio,and they drove out to the airport for a late lunch at the Sheraton. She then went o�f to aSaturday matinee; Al pert lingered at the restaurant with the IBMers, who were waiting fortheir �lights.

Erdman had asked Alpert to sign a "standard nondisclosure agreement." He also o�fered tocome to a quick agreement on the terms of a Bridge/Tecmar deal. Alpert demurred on the �irstand stalled on the second. "I think they understood," he smiles, "how there would be somediscomfort [about] signing something without reviewing it." It was 5 o'clock before the last ofthe IBM renegades was alo�t and homeward bound.

Alpert met IBM agent Blaine at the bar at the Sheraton Hopkins Hotel a few minutes later.They each ordered a beer. Alpert was deeply exhausted, morose. "I just sat there for 10 or 15minutes without saying anything at all," he recalls. "I just had to get away from it all." Blaine, aprofessional, drank in silence. "He seemed to understand," says Alpert.

Then Mr. Blaine from IBM turned to Dr. Alpert from Tecmar and explained that he had asmall problem. It seems he had forgotten to bring cash.

Could Tecmar buy the beers?

On September 13, 1982, IBM brought suit in New York's Supreme Court against Eggebrecht,Erdman, and Stearns, who were summarily �ired that same day. Pending furtherinvestigation, the company obtained a temporary restraining order that forbade the use ofcon�idential IBM information by Bridge Technology, the exIBMers, and anyone associatedwith them. Armed with this document, two senior IBM attorneys made the rounds of �ivecompanies that had been negotiating to buy the product designs. At each, they conductedextensive interviews, demanding to know exactly what the renegades had revealed. "IBMmade it clear they were willing to sue anyone to put a cork in this thing," said one observer."No one took it lightly."

In the meantime, the Bridge trio had begun to splinter. William Greer, the lawyer for Stearnsand Eggebrecht, declared that Erdman had never been a principal in Bridge Technology; he

had simply been hired to solicit �inancial backing and subcontractors. In his eagerness, saidGreer, Erdman may well have oversold" the enterprise, although the lawyer conceded that hisclients went along with Erdman's exaggerations, even when they knew he was stretching thepoint.

In court, Bridge Technology responded to IBM's charges by asserting that 17 speci�ic items ofallegedly stolen information were already known in the industry. "Everything that IBMclaims as con�idential and a trade secret was referred to �irst by Dr. Alpert," said Greer. "Hekept turning the conversation around. It would have been a perfectly innocent thing if Dr.Alpert hadn't been briefed by IBM security agents as to what questions to ask." He added thatnone of the other companies had asked such questions.

The pressure on the defendants increased, however, when IBM produced evidence that, inearly 1982, Eggebrecht and Stearns had served as consultants for a small IBM competitor,Syntrex Inc. of Eatontown, N.J. The consulting deal -- for which they reportedly received$4,500 -- apparently grew out of the engineers' earlier attempt to get Syntrex to bankrolltheir new company. A Syntrex o��icial insisted that they had been "quite scrupulous about [notrevealing] anything of a proprietary nature," but the revelation was damaging nonetheless.

To make matters worse, IBM was putting the squeeze on Erdman. Le�t in the lurch by hisco-defendants -- and particularly vulnerable because of Alpert's tape recordings -- he �inallyagreed to make a full disclosure and to testify against Eggebrecht and Stearns. IBM announcedthe deal on November 19th and, at the same time, amended its suit against the engineers toinclude charges related to the Syntrex consulting job.

On November 30th, Eggebrecht and Stearns threw in the towel. Both agreed to a permanentinjunction barring them from "disclosing, using, or applying" IBM trade secrets andproprietary information. They also agreed to repay an undisclosed portion of their past IBMsalaries and to accept a wide range of speci�ic job prohibitions for the next three years -- ine�fect, banishing them from the industry in which they had built their careers. Indeed, undera separate agreement with a large monetary penalty clause, they cannot even discuss the casein public.

As for Alpert, he began to feel repercussions from the case soon a�ter it became public. Severalof Tecmar's suppliers and distributors and a number of independent professionals sent lettersof gratitude and congratulations, but there was also a steady murmur of criticism,particularly in California's Silicon Valley. At one national trade show, Alpert was openlyinsulted.

"I think there are many people who do not understand what happened, because it's not easy toexplain in three words or �ive words or one sentence," says Carolyn Alpert. "To many, we were. . . �inking on somebody, maybe to apple-polish IBM."

Industry rumors about the Tecmar "sting" betray a certain confusion about the facts of thecase, as well as a more subtle dispute over what was being o�fered for sale: the menthemselves, design capability, or actual designs? Within IBM, no one doubts that Tecmar waso�fered IBM product plans and technology. The general belief is that IBM phrased itsaccusations against the renegades quite conservatively, given the evidence, and executivesmention Alpert's name with respect and gratitude. Robert Townsend, the IBM attorney whomanaged the security team during the investigation, speaks of Alpert's "extraordinary ethics,"and credits him with saving IBM from serious harm.

But outside IBM -- particularly in the PC-peripherals market -- many take the view that therenegades were simply insiders who wanted to go independent. The discussion tends to focuson who the renegades were, rather than what they were trying to sell. In this view, Alpertbetrayed the men solely because they were potential competitors (ignoring the fact that he didnot know their identities when he �irst contacted IBM).

"I don't think there is yet a realization that there is an ethics issue associated with what theyhave done," says Alpert.

Then again, Tecmar will probably not su�fer as a result. Former marketing vice-presidentWertman, for one, believes that Tecmar now has a "favored vendor relationship" with IBM,despite strong denials from both IBM and the Alperts. Now president of Criterion TechnologyInc. , a new Tecmar competitor, Wertman says that Alpert's attorney met with the IBM legalsta�f in September to discuss his client's a��idavit. A�terwards, Alpert told Wertman that IBMhad indicated its enormous gratitude. When Wertman asked what that meant, Alpert said,"Well, they can't promise anything during the litigation . . . but the absolute impression was,there's no way we're going to lose."

About a month later, IBM executives from North Carolina called Tecmar to ask for a tour ofthe company's production facility, apparently to qualify Tecmar as a potential IBM supplier.According to two former Tecmar executives, IBM o��icials subsequently visited the plant andinspected Tecmar's manufacturing and quality control procedures. In December -- shortlya�ter the consent decree was signed -- IBM reportedly invited Tecmar to submit a bid todesign a new communications "modem" for the PC. (A modem is a device for linkingcomputers through a telephone line.) For IBM to ask Tecmar to design such a simple and

LAST UPDATED: OCT 1, 1983

conventional circuit is "fundamentally silly," says Wertman, "unless you see it as a reward."

Alpert, for his part, adamantly denies that he has any payo�f deal with IBM or is expectingany rewards. He says only that he is hopeful of landing an IBM contract someday.

But perhaps all that is besides the point. Wertman, for one, has no patience with those whosneer at Alpert. "I don't think it could have been handled any other way," he says. "His motivesare not important. What counts is that he did the right thing."

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