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Judge Defers in Google-Microsoft Tussle

Posted on: Friday, 28 October 2005, 18:00 CDT

By MICHAEL LIEDTKE

SAN RAMON, Calif. - A federal judge has rebuffed Google Inc.'s attempt to remove court-ordered restrictions limiting its employment of prized computer scientist Kai-Fu Lee, whose recent defection from Microsoft Corp. exposed the escalating tensions between two of the world's best-known companies.

In a ruling late Thursday, U.S. District Judge Ronald Whyte declined to become involved in the legal battle over Lee until next year's completion of a Washington state trial on the validity of a noncompete agreement Lee signed when he joined Microsoft in 2000.

Whyte's stay of the San Jose, Calif. lawsuit filed by Google finalizes a tentative ruling he issued two weeks ago in a case pitting the Internet's search engine leader against the world's largest software maker.

The Washington trial isn't scheduled to begin until Jan. 9, meaning it'll be several more months before there's any chance for Lee to carry out all the duties that Google hired him to do.

Responding to a lawsuit filed by Microsoft, Washington state judge Steven Gonzalez last month issued an order that prevents Lee from working on search technology or directing much of the work to be done at a Chinese research and development office that Google hired him to run.

The noncompete agreement expires in July 2006 - one year after Google lured him away from Microsoft with a $10 million compensation package.

Google hoped to free up Lee this year by filing a suit in California, a state with a history of rejecting noncompete employment causes. Washington, in contrast, honors noncompete agreements.

Although Lee signed his Microsoft contract in Washington, Google asserts California law should apply because its headquarters is in Silicon Valley and Lee moved to the state as soon as he left Redmond, Wash.-based Microsoft.

Whyte decided Google could make the same arguments in the Washington trial.

"Continuing to hear arguments in California would potentially waste judicial resources," Whyte wrote in his 13-page order.

Microsoft spokesman Jack Evans said the company is pleased with Whyte's decision.

Michael Kwun, Google's litigation counsel, said the company is looking forward to the Washington trial, although it "would have preferred a ruling on the merits" of its California lawsuit.

The struggle over Lee, previously little known outside the high-tech industry, has cast a spotlight on the behind-the-scenes acrimony brewing between Google and Microsoft.

A sworn deposition given by a former Microsoft employee in the Washington state case depicted Microsoft CEO Steve Ballmer as an obscenity-spewing leader on a mission to destroy Google - a characterization that Ballmer labeled a gross exaggeration. Other evidence and testimony showed Google hungrily pursuing Lee, who passed along confidential Microsoft documents during the courtship.

The strife has been triggered by Google's rapid rise in just seven years of existence. The company's dominance of the lucrative Internet search engine has provided Google's management with the money to introduce an array of new software, including products that eventually could morph into a threat to Microsoft's long-running dominance of the personal computer.

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On The Net:

http://www.google.com

http://www.microsoft.com

Source: Associated Press/AP Online

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