July 19, 2005 11:55 AM PDT

Microsoft sues over Google hire

Opening a new chapter in its rivalry with Google, Microsoft on Tuesday sued the search giant and a former Microsoft executive who has been tapped by Google to run its China operations.

The suit was filed in a Washington state court against Google and Kai-Fu Lee, who until Monday was the corporate vice president of Microsoft's Interactive Services Division.

Kai-Fu Lee
Source: Microsoft
Kai-Fu Lee

Google said earlier Tuesday that Lee was joining the company and would head up a new research effort in China.

"Accepting such a position with a direct Microsoft competitor like Google violates the narrow non-competition promise Lee made when he was hired as an executive," Microsoft said in its lawsuit, which was seen by CNET News.com. "Google is fully aware of Lee's promises to Microsoft, but has chosen to ignore them, and has encouraged Lee to violate them."

In the suit, Microsoft seeks 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.

"There was no effort by Dr. Lee or Google to try and work out any kind of agreement."
--Tom Burt, deputy general counsel, Microsoft

Google has emerged as a top rival for Microsoft, and several notable employees have left the software giant for Google in recent months. The company is seen as an aggressive rival to Microsoft in areas such as desktop search and e-mail. In addition, its services work well with any operating system.

Google issued a press release on Lee's hiring and announced plans to open a China research and development center this quarter.

"Under the leadership of Dr. Lee, with his proven track record of innovation and his passion for technology and research, the Google China R&D center will enable us to develop more innovative products and technologies for millions of users in China and around the world," Alan Eustace, Google engineering vice president, said in a statement.

Lee and Longhorn
Read about what Google's new hire was working on in his tenure at Microsoft.

Lee, an expert in speech recognition technology, founded Microsoft's China research lab in the late 1990s and worked at Silicon Graphics Inc. and Apple Computer before joining Microsoft.

A Google representative was not immediately available to comment on Microsoft's legal actions.

Google's public touting that it had hired Lee is in and of itself unique. The company rarely announces new hires, with CEO Eric Schmidt's hiring being a notable exception.

Though workers leave tech companies for rivals all the time, it's not uncommon for a dispute to end up in court, particularly when an executive has a contract with a noncompete clause. Microsoft has turned to legal channels before to pursue former employees who it felt were unfairly competing against the company.

Notably, the company sued when former executive Tod Nielsen and a number of ex-Microsoft employees went to work for Crossgain, a start-up that was focused on allowing business applications to run over the Web.

Crossgain eventually disassociated itself from a number of Microsoft workers that were still bound to noncompete agreements. Among the other ex-Microsofties who were forced to step down, at least temporarily, were Nielsen and Adam Bosworth, a founder of Crossgain.

Crossgain was swallowed up by BEA Systems in 2001, with both Nielsen and Bosworth joining the software maker. The two left BEA last year, and Bosworth joined Google.

A Microsoft lawyer said in an interview that Lee's move to join Google was a "particularly egregious" violation of the noncompete agreement that he had signed when he joined Microsoft.

"He has access to sensitive information, to trade secrets about our search technology and business plans and our China business strategies," Deputy General Counsel Tom Burt told CNET News.com. "He has accepted a position in direct competition with Microsoft in those areas."

Lee had been working most recently at Microsoft's Redmond, Wash., headquarters, focusing on new search technologies. According to the lawsuit, for a time Lee had been the person "responsible for overall development of the MSN Internet search application." He also served as a member of a company advisory board that focused on China-related strategies, a post that, according to the suit, gave him access to the company's business strategy and planned expansion targets.

In the suit, Microsoft said that on July 5, Lee informed his department head, Eric Rudder, that he did not plan to return to Microsoft from a sabbatical and that he had talked with Google about heading up that company's China efforts.

Burt said that Microsoft was formally notified of Lee's plans Monday and that the company served him with legal papers later that day.

"There was no effort by Dr. Lee or Google to try and work out any kind of agreement," Burt said. "The combination of those factors meant that we really had no choice but to file this suit to protect our confidential information."

CNET News.com's Stefanie Olsen contributed to this report.


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In the ring
So finally M$ and Google have put on their
gloves and have come to the ring for a public
fight, instead of fighting behind the scenes.

It would be interesting to watch how this
one turns out. Microsoft has had law suits with
almost every major company in Silicon Valley so far. Has lost some big ones too.

I wish good luck to Google. Though I am sure
Google guys are more interested in intellectual
wars waged behind computer screens than the dirty ones on court.
Posted by pythonhacker (71 comments )
Reply Link Flag
What they did is obviously illegal
So why shouldn't Microsoft have the right to sue! Imagine being an executive of a company and getting their business plan and having detailed information on one of their technologies. Now decide to go to another company where you are going to do nearly the same thing!

It doesn't matter what company it is, they sign non-compete and confidentiality contracts on purpose. If I hadn't done the same thing, it'd be easy, and completely wrong, if I could just call up the competition and tell them to hire me because I know all about my current companies plan.
Posted by Stork1 (20 comments )
Link Flag
Pot calling the kettle black.
MicroSoft has over the years hired key people away from their
competitors as a way of gaining an unfair advantage. I think it's a
hoot that Google has use Microsoft's own tactics on them. Turn
about is fair play, hope Google cleans their clock. Microsoft has
worked hard to gain the reputation they enjoy, they deserve a good
Posted by thomcarl (72 comments )
Reply Link Flag
Time to give MS a taste of their own medicine.
Posted by (4 comments )
Link Flag
Who, might I ask?
Any specifics on that one? Who, that had a non-compete clause in their contract with a former employer, has MS hired, in violation of that contract? And if they have, why didnt the company that had the contract sue?

Any answers there? I thought not. It is easy to say Micro-sucks or some other BS, as long as you dont have to provide any specifics, or show why.
Posted by catchall (245 comments )
Link Flag
Whats sauce for the goose . . . !
Posted by Mister C (423 comments )
Link Flag
hope Google didn't miss this one...
Either Google looked meticulously into the matter before hiring him or they (H/R Dept. notabbly) just plained missed it.

I have to think that a company saavy as Google would certainly have their Legal Dept. thoroughly review the NDA before offering him the position.

If indeed NDA/NCA issue went over their heads, then shame on them for missing such a key factor for hiring an executive. Especially in this industry during these times.

I like Google and I hope this is an honest mistake or a legal move on their part. I wouldn't want to see them turn to the Dark Side one day.
Posted by BodegaBay (7 comments )
Reply Link Flag
HELLO!? Google is seen as a rival to Microsoft on the desktop search market? ***?
GOOGLE is a search engine & a defacto one on other Internet Browsers for a LOOOOOOOOOOONG time, waaaaaaay before Redmond decided to join the party.
Typical C/NOT biased towards Citizen Gates who line their pockets with ad revenue rather than reporting technilogical facts.
Posted by Llib Setag (951 comments )
Reply Link Flag
Go Google
Let me make sure I got this right, it's OK for Microsoft to steal someone elses idea lock stock and barrel and totally destroy jobs and competitors at the same time, but it's not OK for one of their own employees to go work for someone else or they cry fowl?

They stole the Windows idea from Xerox
They stole the spreadsheet idea from Lotus 123
They stole the word processing idea from Word Perfect
They stole the browser idea from netscape
They play every dirty trick in the book

I hope MS gets their butt kicked
Posted by gbob1960 (4 comments )
Reply Link Flag
yes...it is.
your examples are ridiculous at best. so by your reasoning, no business can produce anything that anyone else has made or thought of before. i mean, what car do you drive gary? odd are its not a ford but whatever company made your car stole that idea? you defend ford as aggressively? if you were a rational person, you would defend microsoft here even if you didn't like them.

this isn't about ideas its about a guy that microsoft had a contrat with that stated he could work for a competitor in the same capacity for X period of time because microsoft was going to entrust him with business plans, business strategy, product roadmaps, expansion targets, etc. the guy agreed to this by signing the contract. he gets paid well AND cannot be fired (like an at will employee and assuming he doesn't violate any other unknown clause in this contract) so he has job security too. he breaks this contract by violating this clause and google is sued for hiring him. pretty straightforward...for a rational person.
Posted by tlite722 (160 comments )
Link Flag
Googles online OS plans
I think google is planning to provide an fully operational online OS or desktop free to it's users something like the free for life personal online desktop found at <a class="jive-link-external" href="http://www.cosmopod.com" target="_newWindow">http://www.cosmopod.com</a>
Posted by iqula (59 comments )
Reply Link Flag
May 7, 1997 - Borland sues Microsoft over brain drain
From <a class="jive-link-external" href="http://news.cbsi.com/2100-1023-279561.html" target="_newWindow">http://news.cbsi.com/2100-1023-279561.html</a> -

Saying that he "just wants Microsoft to leave us alone," Borland
International (BORL) CEO Delbert Yocam today filed a lawsuit
against Microsoft (MSFT), claiming that the software giant is
hiring away Borland's key employees to put it out of business.

Borland claims that in the past 30 months, Microsoft has hired
34 of the ailing software developer's key employees by offering
"large signing bonuses of several millions of dollars and other
incentives," according to the suit. "It's like we're in the desert,
and Microsoft is stealing our water bottle," said the executive,
clearly frustrated by Microsoft's recruiting operations.

The suit claims that many of those former employees now hold
strategic positions at Microsoft that mirror their former roles at
Borland. Yocam said Microsoft is targeting key employees who
can use their knowledge to improve Microsoft's products.

A prime example is Paul Gross, formerly Borland's vice president
of research and development, now vice president of Microsoft's
Developer Tools Division. To date, Gross is the highest-ranking
Borland defector.

Yocam maintains that Microsoft is luring personnel away with
huge signing bonuses, some in excess of $1 million. "They have
the audacity to send limos to Borland's headquarters to take
Borland employees out to lunch. I mean, this has got to stop."

. . .
Posted by (1 comment )
Reply Link Flag
Funny stuff
Isn't it hilarious how MS thinks the rules do not apply to them, and then cry like babies when the tables are turned? That MS could complain with a straight face that another company is not competing fairly shows just how clueless they are.

MS is on the ropes and are scared. They are losing market share in many markets and attempts to start competing in new markets for them are falling flat.

People are finally getting hip to the lies and crappy software they produce. MS is a slowly sinking ship. Employees are jumping ship in bigger numbers. What do they expect them to do, work in another industry? Work in a computing field that they aren't experts in? Besides, Google is not a MS competitor, MS is a follower of Google(and a lot of other companies).
Posted by Bill Dautrive (1179 comments )
Link Flag
the key difference
that is not explained in this article is whether or not any borland employees that defected were under contract and had non-compete clauses as is stated in the current google situation. if everyone is 'at will' then people should be able to work, quit, and go to another employer whenever they want and the employer should be able to hire anyone and pay them anything...including google.
Posted by tlite722 (160 comments )
Link Flag
he's in China
The man is in China, you *******.
Posted by (1 comment )
Reply Link Flag
IDOT vs. Microsoft
Catchy title...

I see that Microsoft has learned their paving techniques from the various departments of transportations. First their programs have names, then they switch to numbers. Now its numbers and names, to add more confusion.

Lets take Illinois for example, we have streets, highways, and interstates. But in an effort to make our naming conventions less cumbersome, they insist on connecting these three thrufares with what we call routes. At any given point in the chicago suburbs I can be on route 58, and at the same time have traveled across 1/2 a dozen different street names.

I suppose things could be worse, I could be in atlanta trying to find the intersection of peachtree and peachtree.

How does this relate to Microsoft you ask? Simple, they should pick a naming convention and stick with it.
Posted by (1 comment )
Reply Link Flag
agreement with MSFT, do they honor those?
How could a company agree with MSFT on anything, you cannot
trust them any further than you can throw a tablet pc, if that,
and it seems they might have even stolen that idea once too.
For Brad Smith and other softie lawyers, its fair time they were
on the losing end of the stick, Google using a loophole of CA
contract law to invalidate the MSFT agreement seems to be a
case of what comes around, goes around. I hope Goolge gets
some good ideas out of Lee if he has any. From the looks of the
Windows interface they say he worked on, there may not be
much to worry about. Lets hope Google wins, then we all win.
Posted by educateme (101 comments )
Reply Link Flag
The Google
The man is in China, you *******.

<a class="jive-link-external" href="http://www.blueairnews.com" target="_newWindow">http://www.blueairnews.com</a>
Posted by ip_fresh (59 comments )
Reply Link Flag
Eric Schmidt is the biggest Mafia puppet in the US. He is bad news for apple users. http://endmafia.com
Posted by geo11101 (76 comments )
Reply Link Flag

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