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Motorola settles suit with Nortel's new CEO

Mike Zafirovski will pay $11.5 million to Motorola and refrain from disclosing its trade secrets to Nortel.

Motorola, the second-largest maker of mobile phones in the world, said Monday that it has reached a settlement in its lawsuit against former chief operating officer Mike Zafirovski.

Earlier this month, Motorola sued Zafirovski after he was named as the new chief executive officer of telecommunication equipment maker Nortel Networks. Motorola claimed in its suit that Zafirovski's new role would inevitably result in the disclosure of Motorola's trade secrets. Motorola and Nortel compete against each other in the wireless equipment market.

Motorola had asked for an injunction to prevent the executive from working for Nortel for two years. But now it seems the two sides in the dispute have kissed and made up. As part of the settlement Zafirovski will repay $11.5 million in cash to Motorola, which was part of his separation payment from Motorola. But Nortel has agreed to fully reimburse him.

In addition to promising not to disclose trade secrets to his new employer, Zafirovski and Nortel have also agreed not to recruit Motorola employees for a specified period. The settlement also includes other restrictions.

"We worked in good faith to resolve this issue with Motorola and we are very pleased with the successful outcome," Harry Pearce, chairman of Nortel's board of directors, said in a statement. "The Board selected Mike as we believe he is the best candidate to assume the role of president and CEO and we have every confidence in him. We look forward to a great future together."

Zafirovski left Motorola in January after being passed over for the CEO position at the company. He is expected to assume his new role at Nortel on Nov. 15.

Zafirovski is taking over Nortel at a time when the company is just starting to get back on track after two and half years of scandal. In 2004, the company fired former CEO Frank Dunn and several other executives. It was also the target of several investigations by U.S. and Canadian authorities.

"I am pleased that my full focus can now be applied to accelerating Nortel's business momentum," Zafirovski said in a statement. "I am looking forward to working with Nortel's leadership team and its employees to create a new chapter of prosperity and prominence for the company and its stakeholders."