Microsoft and Google Settle

Microsoft said it’s settled its litigation with archrival Google over the latter’s hiring of Kai-Fu Lee, the executive who led Microsoft’s expansion into China.

When Google tapped Lee to head a new research lab in China, Microsoft cried foul. In July, it sued Google and Lee for violating the terms of a non-competition agreement Lee had signed while at Microsoft.

Microsoft put out a statement saying, “Microsoft, Dr. Lee and Google have reached an agreement that settles their pending litigation. The Parties have entered into a private agreement that resolves all issues to their mutual satisfaction.”

The terms of the agreement were confidential, and, according to Microsoft, all parties had agreed to say nothing more, although Microsoft spokesman Jack Evans added, via e-mail, “We are pleased with the terms of our settlement with Google and Dr. Lee.”

According to Microsoft’s complaint, filed in Washington State Court, Lee was one of the main architects of Microsoft’s business strategies in China. Moreover, he was most recently corporate vice president of the natural interactive services division, where he oversaw speech, natural language interfaces, advanced search and help, and authoring and learning technologies. According to Microsoft’s complaint, Lee led the development of MSN’s new search technology.

While Microsoft insisted that Lee was an insider who helped out on search and knew the company’s competitive strategies, Lee and Google insisted that he had been marginalized at Redmond and wasn’t up to speed on Microsoft’s plans.

Google said the claims were without merit and countersued in federal court in San Jose, Calif.

Microsoft won a restraining order preventing Lee from doing anything at Google that would be competitive with what he did at Microsoft, but Lee went to China to look for a location for the Google research lab.

The suit was in danger of becoming moot, because Lee’s non-compete agreement had only a one-year duration, leaving him free to compete in July; the suit was expected to drag on long after that.

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