[FoRK] Google vs. MSFT: Non-Competes
Ian Andrew Bell FoRK
Wed Jul 20 08:22:41 PDT 2005
This case is the right one to set a precedent, and potentially
(officially) invalidate Non-Competes in the Valley -- simply because
both parties have the bucks to ride this through a long case. If
Google truly isn't evil, they'll fight this one for all of us..
Microsoft sues over hiring
Former exec joins Google to open lab
Verne Kopytoff, Chronicle Staff Writer
Wednesday, July 20, 2005
Microsoft's rivalry with Google spilled into the courts Tuesday after
the software giant sued Google for hiring one of its former
executives to open a research lab in China.
The suit, filed in King County, Wash., Superior Court, accuses the
executive, Kai-Fu Lee, of violating a non-compete agreement with
"What we are interested in is making sure that our confidential
information is protected and that Dr. Lee isn't in a position where
he could compromise, even inadvertently, our confidential
information," said Tom Burt, Microsoft's deputy general counsel.
In a statement, Google denied the accusations, saying "we have
reviewed Microsoft's claims and they are completely without merit. We
will defend vigorously against these meritless claims and will fully
support Dr. Lee."
Google and Microsoft are engaged in an intense battle for users. Each
has unveiled a series of new features in an effort to cement user
loyalty and increase adverting revenue.
Google leads the race, which also includes Yahoo and IAC/
InterActiveCorp's Ask Jeeves.
Microsoft's suit highlights a common business practice in some
states. Companies routinely require workers, particularly executives,
to sign contracts that prohibit them from joining competitors after
Protecting company secrets is the goal. The fear is that employees
will reveal important information about products and strategies to a
In California, non-compete agreements are unenforceable, according to
Michael McCabe, an employment law attorney in the San Francisco
office of Reed Smith. Workers can join any firm they want, even a
rival, he said. But as part of an employment contract, employees can
be prohibited from sharing trade secrets and trying to steal
customers after changing jobs, he said.
"A big battle, when you have companies in different states, is whose
law will apply," McCabe said. "The battle then becomes is it
appropriate to enforce, is it overbroad or really necessary to
protect an employer?"
Google announced Lee's hire Tuesday morning as president of the
Mountain View search engine's China operations. His job is to open a
research and development lab in China, a nation that Internet
companies covet because of its huge potential market.
Lee was previously a vice president for Microsoft, starting in 2000.
Prior to that, he founded Microsoft's research lab in China and was
involved in such technologies as multimedia and voice recognition
Microsoft argues that Lee signed a non-compete agreement when he
became a vice president five years ago. Provisions block him from
working on certain kinds of projects for a rival for a year after his
In its court filing, Microsoft said that Lee was closely involved
with Microsoft's efforts in search, including the products the
company is currently developing and its future business plans in
China. Microsoft said he was given access to proprietary information
that would give any competitor a strategic and economic advantage.
Burt said that Lee notified Microsoft that he was leaving for Google
on Monday. He added that Lee and Google never tried to negotiate a
deal to avoid the conflict.
Lee could work for Google, Burt said, but on projects unrelated to
what he did at Microsoft. Or he could simply be paid to do nothing
for a year, he said.
Burt said it is rare for Microsoft to file suit over non-compete
agreements, preferring to cut deals beforehand. However, Microsoft
was involved in a high profile episode in 2000 and 2001, when several
former employees left for Crossgain, a startup that allowed business
software to work on the Internet.
Those workers eventually left Crossgain after Microsoft pressured the
company. They rejoined its successor company, BEA Systems, after
their non- compete agreements had expired.
E-mail Verne Kopytoff at vkopytoff at sfchronicle.com.
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