July 28, 2005 4:00 AM PDT

Poachers encroach on tech-talent turf

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employer's customers or potential customers for a set period; and using or disclosing confidential information created or acquired in the course of employment.

There may be wiggle room in some of these agreements, Segal suggested. For example, the hiring employer may want to closely examine a clause barring the solicitation of customers: "Does the restriction cover only current customers or does it also apply to former and potential customers?" he wrote.

Postemployment contract restrictions are becoming more widespread at California technology companies, said Martin Foley, attorney with the firm Sonnenschein, Nath & Rosenthal. Given the importance of intellectual property to a company's success, businesses are now asking both executives and "worker bees on the line" to sign agreements aimed at safeguarding a company's secrets, Foley said.

But when it comes to noncompete clauses in particular, California tends to side with footloose employees. Except in narrow circumstances, the state's code renders such agreements meaningless.

Not only that, but state courts have at times struck down employment contracts signed outside the state, Foley said. "California has voided noncompete contracts from non-California employers when the employee works in California or lives here," he said.

Foley also said the state has ruled against a legal theory invoked in Microsoft's suit: that former employees will inevitably disclose a company's trade secrets when moving to a competitor.

The Lee case seems to present some tricky questions about jurisdiction. Though Google is headquartered in Mountain View, Calif., Lee is supposed to lead the company's operations in China.

In their court filing last Thursday, Google and Lee said Lee resides in California.

Microsoft took issue with Google's filing. "Forced to confront its clear violation of Washington law, Google is attempting to manufacture California residency for Dr. Lee in a poorly disguised effort to persuade a California court to treat him as a California resident in order to evade Washington law and renege on the agreement Dr. Lee made to Microsoft," Microsoft said in a statement Wednesday.

Foley expects some high-powered legal fireworks in the case. "There's going to be a hell of a battle," he said.

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