[FoRK] Google vs. MSFT: Non-Competes

Mike Masnick mike
Wed Jul 20 09:56:07 PDT 2005

Non-competes are already illegal in the Valley (and, actually, in all of 

They're legal in most other places, though... and since this argument is 
about China (and filed in Washington state) it has little to do with the 
state of non-competes in the Valley.


At 08:22 AM 7/20/2005 -0700, Ian Andrew Bell \(FoRK\) wrote:
>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
>Google's assistance.
>"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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