Google Strikes Back in Executive Tug-of-War

Google filed a countersuit against Microsoft last Thursday, claiming the non-compete clause in contracts signed by Redmond executives won’t stand up under California laws.

Last week, Google hired Kai-Fu Lee away from Microsoft. Lee had opened Microsoft’s China Research Lab before returning to Redmond, and Google hired him to do the same. Microsoft immediately sued both Lee and Google, claiming breach of Microsoft’s employee confidentiality and non-compete agreement.

“We are asking the Court to require Dr. Lee and Google to honor the confidentiality and non-competition agreements he signed when he began working for Microsoft,” a Microsoft statement read.

In its suit filed July 21 in California Superior Court, Google asked for “judicial relieve from an overreaching and unlawful non-compete provision drafted by defendant Microsoft Corporation.”

Google’s lawyers argued that Microsoft’s non-compete clause is invalid under California laws that say, “every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.”

While Lee’s contract with Microsoft was governed by the state of Washington, they said, California law should now apply to Lee, because he plans to maintain a residence in the state while he opens Google Research China, and he’s applied for a California driver’s license.

“What they’re doing is intimidation, pure and simple. It is clearly an illegal restraint of trade,” Nicole Wong, Google associate general counsel, said in an e-mail. “They’re trying to intimidate Dr. Lee and any other employee who might want to leave Microsoft. We won’t let that happen.”

Google and Microsoft tell different stories about how Lee fled Microsoft.

According to Google, “In early June 2005, Dr. Lee left Microsoft on sabbatical. On or about July 5, 2005, Dr. Lee informed Microsoft of his intention to resign from Microsoft at the end of this sabbatical, and that he was considering employment with Google. On July 18, 2005, Dr. Lee’s last day of employment with Microsoft, he was served with a complaint” alleging breach of the non-compete clause of his contract.

According to Microsoft’s complaint, Lee told his manager, Eric Rudder, that he initiated hiring negotiations with Google back in April. And a Microsoft spokeswoman told that Lee “never came back” from his sabbatical.

Google’s complaint went on to say that Lee moved to California to begin working at Google on July 19.

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