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Thursday, August 20, 2009, 05:00 am PT (08:00 am ET)

Palm rejected Apple's no employee poaching offer - report

Ed Colligan, the former chief executive of Palm, reportedly rejected an offer years ago from Apple co-founder Steve Jobs to agree to not hire each others' employees.

The information comes from a U.S. Justice Department investigation that obtained communications between the two CEOs, according to Bloomberg. After rejecting the offer, Colligan reportedly told Jobs that what he proposed was "likely illegal."

The conversation took place in August 2007, just after the launch of the iPhone, and when Palm appointed Apple's former senior engineering VP, Jon Rubinstein, as executive chairman.

According to the communications between the two, Jobs told Colligan he was concerned that Rubinstein, as a former Apple employee, was recruiting existing Apple employees. "We must do whatever we can to stop this," Jobs reportedly said.

The documents say that Colligan told Jobs he considered the proposal, but ultimately decided against it.

"Your proposal that we agree that neither company will hire the other’s employees, regardless of the individual’s desires, is not only wrong, it is likely illegal," Colligan said to Jobs, according to the communications.

However, Jobs' specific proposal was not included in the communications. It was only referenced and discussed by the two executives.

"Jobs said Apple had patents and more money than Palm if the companies ended up in a legal fight, according to the communications," Bloomberg reported. Apple spokeswoman Katie Cotton declined to comment on the matter and Jobs did not return e-mails.

Since Rubinstein came on board, Palm has hired a number of former Apple employees. Also in 2007, Apple's former chief financial officer, Fred Anderson, joined as a general board member. Most recently Jeff Zwerner, a former creative director from 2001 to 2003 at the Cupertino, Calif., company, now serves as Palm's senior vice president.

The proposal from Jobs sounds similar to a informal agreement that was reportedly held between Apple and another rival, Google. Earlier this month, it was revealed that the two companies shared an agreement to not poach each others' workers while the Google CEO, Eric Schmidt, served on Apple's board. It is believed the unwritten agreement may have sparked an antitrust investigation from the U.S. Justice Department.