December 22, 2005 4:20 PM PST

Microsoft settles with Google over executive hire

Microsoft has settled its lawsuit with rival Google over the hiring of Kai-Fu Lee, an expert in speech recognition technology and the man who founded Microsoft's China research lab in the late 1990s.

"The parties have entered into a private agreement that resolves all issues to their mutual satisfaction," Microsoft said in a prepared statement released Thursday afternoon. "The terms of the agreement are confidential and all parties have agreed to make no other statements to the media regarding it."

Google announced in July its plans to hire Lee to head up its China research lab. Microsoft immediately filed suit in Washington against Lee and Google, arguing that Lee was violating a one-year noncompete agreement that was part of his Microsoft contract.

The tug-of-war over Lee was seen as Microsoft's latest attempt to thwart Google's growing influence. The two have increasingly crossed swords in areas such as search, and Mountain View, Calif.-based Google won an important round this week when AOL chose it over Microsoft as a partner. Google and Microsoft were pursuing AOL to help them expand advertising, instant messaging and video offerings.

In its suit, Microsoft had sought monetary damages as well as an injunction upholding the noncompete clause and other provisions of Lee's contract, including terms barring him from sharing Microsoft trade secrets. Google filed its own case in California, asking a judge to strike the noncompete clause. That matter had been moved to federal court. The case was schedule to go to trial on Jan. 9.

Google released a statement from Lee, who is now president of engineering, product and public affairs for Google China, which said that he was "pleased with the terms of the settlement."

Court filings in the case show that Microsoft had paid Lee more than $3 million since August 2000 and more than $1 million last year alone. Lee originally joined Microsoft in Asia in 1998 and founded its China research lab. He left and was rehired by Microsoft to work at its Redmond campus.

5 comments

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Free to work
I thought this was a free country where you could work for whom you wanted. I guess the M$ coffers were running a little low on cash so they had to sue someone to get a little more much needed revenue.
Posted by yrrahxob (77 comments )
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Not if you sign an exclusivity contract.
If you sign a contract that says "I will not work for a competitor for one year after quitting this company", you are forfeiting that right. More so if you accept money in return.
If you think such a contract is abusive think that there are positions (such as this one) where as part of the business you learn things that are confidential to the company, and regardless of your willingness not to disclose that info once you leave the company, you are conditioned to make your decisions based on that information. For example, he could have learned of Microsoft plans to implement products that would compete with Google, and at his new position he would have made decisions for new and existing products considering those plans, and that wouldn't be fair as that was confidential information. Thus, his employer asked him, when he entered the company, to give contractual warranties that won't be happening.
You are free to work for whoever you want, unless you voluntarily (and in exchange for money) sign a contract that prohibits you to do so. Taking the money and then ignoring the contract is not ethic, regardless of who the your current employer is (and before you ask what money I'm talking about, most top employees in tech companies receive an important sums of money to move to a new company, a sum they wouldn't be able to get without signing such agreements).
Posted by Hernys (744 comments )
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Oh well, Two Winners and Three losers!
For an exclusivity contract to be valid and enforceable in law, the former employer,in theory must pay a salary or stipend for the period of exclusivity, otherwise it becomes an illegal restraint of trade! which in effect means that business ethics and control laws become into play, thus any contract bars a person from conducting his native or primary talent, then it becomes unconscionable and very illegal contract!

The legal action, was merely a deliberate delaying tatic only,with annoyance cost extra value for the other party!, for if pushed to judgement, microsoft would lose outright, and thus by common law debar and automatically void ,all exclusivity contracts period!

Thus no pay or stipend, automatically voids said contracts, under restraint of trade
Posted by heystoopid (691 comments )
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More to it than that.
I am sure Microsoft was eager to settle for the very reasons you give. However there was some industrial espionage reported where the new-hire provided internal and classified documents to Google while still a Microsoft employee.
Posted by zaznet (1138 comments )
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Microsoft Lost?
I dislike the nature of a private settlement as you clearly have no idea who won or lost. In cases like this, it is important to establish some precedent if you ever think you will be caught in the same situation again.

That thought and that Microsoft had more to gain by winning the trial makes me suspect that Microsoft got the shorter end of the deal.
Posted by zaznet (1138 comments )
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