The threat was to prevent migration of employees and keep wages low.
Steve Jobs had reportedly threatened to sue Palm, if the firm did not concede to a deal to stop poaching Apple employees, according to a new a court filing.
The court filling was submitted as part of a civil suit being levelled against several top tech firms including Apple, Google and Intel over allegation of the firms' involvement in an illegal anti-poaching agreeement to keep employee wages low.
The plaintiffs have tried to keep a range of documents secret, which led to details of Jobs' 2007 correspondence with former Palm chief executive, Edward Colligan, becoming part of the public record, according to Reuters.
Edward Colligan's affidavit revealed that Jobs proposed getting rid of competition between the two firms for talent
"Mr. Jobs also suggested that if Palm did not agree to such an arrangement, Palm could face lawsuits alleging infringement of Apple's many patents," Colligan said.
Further, Colligan told Jobs that the plan was 'likely illegal,' and that the firm was not 'intimidated' by patent litigation threats from Jobs
"If you choose the litigation route, we can respond with our own claims based on patent assets, but I don't think litigation is the answer," Colligan said.
Judge Koh is considering whether the civil lawsuit can progress as a class-action suit, which could further lead to a larger settlement.
However, lawyers for the defendants claim that damages could reach hundreds of millions of dollars, while Koh claims that the plaintiffs' economic analysis has holes.