Arguments End in Microsoft vs. Google

The judge hearing preliminary arguments in Microsoft versus Google said he’d rule on Tuesday, September 13.

At issue is whether Kai-Fu Lee, the former Microsoft executive who was hired to head a new Google research lab in China, can go to work pending the verdict in the trial.

The two-day hearing wrapped up on Wednesday will decide whether the temporary restraining order Microsoft won against Lee’s going to work for Google should hold.

Microsoft sued Lee and Google in Washington federal court, charging it violated a non-compete contract Lee signed when he went to work at Microsoft. Google countersued in California state court.

Google offered to limit Lee’s work to recruiting students in China. But Microsoft argued that Lee was a top executive who was privy to Redmond’s technology and business strategies, especially for China, and that he should be barred from that work as well as work on general technology.

Microsoft may be relying on a legal doctrine known as “inevitable disclosure,” said Chris Scott Graham, a partner in the law firm Dechert LLP. “The theory is, in order to do my job, it would be inevitable to draw on information that would be proprietary in nature.” Graham said that the State of California did away with that theory because it limits the ability of people to engage in lawful work.

Jeff Hocking, a managing director of executive recruiting firm Korn Ferry, said, “We worry about non-competes a lot. If they have a non-compete, we need to see it.” His company’s recruiters share the contracts executives have signed with both its own general counsel and the companies doing the search. He said it’s likely that Google evaluated Lee’s contract before hiring him.

Dan McCoy, a partner in Fenwick & West, said the e-mail trail probably made Microsoft more aggressive than it might have been. Microsoft claimed in court documents that Lee forwarded Google a copy of a confidential document relating to its China strategy. Google responded in its documents that most of the memo was old and generic and had been published all over the Web.

“This is the classic argument,” McCoy said. “Microsoft assumes that any document by a high-level executive that goes to a competitor is confidential, and there’s something untoward. It happens all the time. We see a lot of white papers that are forwarded.

While the memo is a bit of a sideshow, he said, “Microsoft is using the disclosures of confidential material to get a judge who might be on the fence to go their way.”

Judge Steven Gonzales of King County Superior Court will make the decision about whether Lee can go to work along. Although next Tuesday’s ruling is only on a preliminary injunction, McCoy pointed out that if it’s granted, Microsoft will already have won most of what it wants. Lee promised not to compete with Microsoft for one year. Google announced his hiring on July 19, and Microsoft sued the same day. By the time the trial opens on January 7 2006, it would already have lost nearly six months of Lee’s talents.

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