Stakes High in Google Injunction Hearing

Microsoft and Google squared off in Washington State court Tuesday about whether Kai-Fu Lee’s work at Google would violate a non-compete contract.

According to Google’s opposition to Microsoft’s request for a preliminary injunction against Lee working for Google, Lee wouldn’t be in competition if he went to China to open a Google research lab there, because there’s not much to compete with on Microsoft’s end.

Microsoft sued Lee and Google for violating a non-compete agreement Lee signed when he went to work for Microsoft. Redmond already won a temporary restraining order against Lee’s going to work at Google; arguments in court are aimed at making the restraining order last through the trial.

Google already has said that it would limit Lee’s activities to opening a China research center and recruiting Chinese engineers to work there. Google said that Microsoft’s definitions are too broad. For example, because Microsoft is recruiting in China, it argues that if Lee recruited in China, he’d be competing. Also, Lee recruited for Microsoft’s China lab five years ago as a contractor, not a Microsoft employee.

“It is a misnomer to suggest that there is a ‘China strategy,’ as opposed to organizational proposals for how to deal with internal competition for resources and bickering within Microsoft’s poorly coordinated China organization,” Google’s motion said.

According to Google spokesman Steven Langdon, “They tried to portray Kai-Fu as an influential China executive, when in fact he had neither the resources nor the responsibility to get anything done.”

Langdon said Lee’s ideas about China had fallen on deaf ears in Redmond. “He tried and tried, but no one would listen to him, nor were they interested in his suggestions. The facts show that he was very far from being an influential China executive.”

Among the depositions presented by Google in opposition to Microsoft’s request to block Lee’s job switch was one from former Microsoft engineer Mark Lucovsky that described how Microsoft CEO Steve Ballmer went ballistic upon hearing that Lucovsky was making his own trek to the Googleplex. While it’s embarrassing, attorneys familiar with the case said it was likely part of a legal strategy.

“Well, it is embarrassing, but more importantly, I think Google is trying to show Microsoft’s anticompetitive bent. Google’s implicit argument is that Ballmer’s conduct confirms that Microsoft’s lawsuit isn’t about protecting Microsoft’s confidential information but about unfairly hindering competition,” said Robin Meadow, a partner in the law firm Greines Martin Stein & Richland.

Chris Scott Graham, a partner in the law firm Dechert LLP, agreed about Google’s legal strategy for the Lucovsky anecdote. “One reason would be to be able to argue to the court that Microsoft’s request for a preliminary injunction is being brought for anticompetitive purposes rather than for any trade secret issues. Google may be trying to convince the court that the issue is one between Microsoft and Google on a higher level,” he said.

The hearing on Microsoft’s motion for a preliminary injunction likely will wrap up on Wednesday, and the judge is likely to rule quickly, said Dan McCoy a partner in the law firm Fenwick & West. It’s the most crucial ruling in either of the lawsuits.

“If they get the preliminary injunction, it’s a win,” McCoy said. “Even if [Lee and Google] were to prevail at the trial in January, there will have been seven or eight months there where Lee has not been engaged with Google. Seven or eight months lost is an eternity in this technological space. This is it.”

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