Microsoft levied the lawyers against Google on Tuesday as Google announced the hiring of Dr. Kai-Fu Lee for the top China R&D position at Google. Microsoft filed the lawsuit against Lee and Google for violating a no-compete agreement Lee had signed with Microsoft. His job at Microsoft was exactly what he’s now doing for Google.
The lawsuit promises to be a major battle between two major competitors in the search industry. With both companies vying for market share in the burgeoning Chinese market, the switch of Lee from Microsoft to Google could have major strategic importance for both companies and Microsoft is hot.
“Creating intellectual property is the essence of what we do at Microsoft, and we have a responsibility to our employees and our shareholders to protect our intellectual property,” said Microsoft in a statement yesterday. “As a senior executive, Dr. Lee has direct knowledge of Microsoft’s trade secrets concerning search technologies and China business strategies. He has accepted a position focused on the same set of technologies and strategies for a direct competitor in egregious violation of his explicit contractual obligations.”
The lawsuit claims Lee and Google knowingly violated the contract and the suit says the Lee told Microsoft Google warned him about all these issues Microsoft alleges in the suit. Microsoft said the Lee was the chief and primary developer of their entire MSN search division and all the relevant properties tied to MSN’s search efforts as well as the chief architect of their China strategy. They also say he had access to a lot of sensitive information as a vice president for the company and that his current position at Google will allow him to utilize all his knowledge of Microsoft for the benefit of Google.
Google hasn’t said much about the suit so far. The made their big announcement of Lee’s hiring yesterday but the pleasant aspect took a back seat to Microsoft’s lawsuit.
“We have reviewed Microsoft’s claims and they are completely without merit. Google is focused on building the best place in the world for great innovators to work. We’re thrilled to have Dr. Lee on board at Google. We will defend vigorously against these meritless claims and will fully support Dr. Lee.”
The no-compete contract also says that all legal action will be resolved in Washington and the suit says that since the agreement was reached in Washington and Google has offices in Washington, Washington state law will apply to this case. This is significant because were this to be handled in California, the no-compete agreement would be pointless.
While Google claims the suit is meritless, the suit says the Google warned Lee of all the problems he might be facing from an angry Microsoft on this one. It also said Google gave assistance to Lee in violating his contract with Microsoft. On the surface, Microsoft certainly has a case here and all the things they are worried about are legitimate. The no-compete agreement says that Lee would have to wait a year before being hired by anyone in a similar field as Microsoft. They claim Google qualifies.
Microsoft has gone after folks before and won. The case with Lee seems to be pretty iron clad. What will most likely happen will be that Google could quite possibly shell out some money but more importantly, Lee will be jobless for about a year. In any event, Dr. Lee will be in for a long ride back to China.
John Stith is a staff writer for Murdok covering technology and business.
