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Microsoft sues Google for tempting search expert
Hire violates employee contract...

By Ina Fried

Published: Wednesday 20 July 2005

Opening a new chapter in its rivalry with Google, Microsoft on Tuesday sued the search giant and a former Microsoft executive who has been tapped by Google to run its China operations.

The suit was filed in a Washington state court against Google and Kai-Fu Lee, who until Monday was the corporate vice president of Microsoft's Interactive Services Division.

Google said earlier on Tuesday that Lee was joining the company and would head up a new research effort in China.

Microsoft said in its lawsuit: "Accepting such a position with a direct Microsoft competitor like Google violates the narrow non-competition promise Lee made when he was hired as an executive. Google is fully aware of Lee's promises to Microsoft, but has chosen to ignore them, and has encouraged Lee to violate them."

In the suit, Microsoft seeks monetary damages as well as an injunction upholding the noncompete clause and other provisions of Lee's contract, including terms barring him from sharing Microsoft trade secrets.

Google has emerged as a top rival for Microsoft, and several notable employees have left the software giant for Google in recent months. The company is seen as an aggressive rival to Microsoft in areas such as desktop search and email. In addition, its services work well with any operating system.

Google issued a press release on Lee's hiring and announced plans to open a China research and development centre this quarter.

Alan Eustace, Google engineering vice president, said in a statement: "Under the leadership of Dr Lee, with his proven track record of innovation and his passion for technology and research, the Google China R&D centre will enable us to develop more innovative products and technologies for millions of users in China and around the world."

Lee, an expert in speech recognition technology, founded Microsoft's China research lab in the late 1990s and worked at Silicon Graphics and Apple before joining Microsoft.

A Google representative was not immediately available to comment on Microsoft's legal actions.

A Microsoft lawyer said in an interview that Lee's move to join Google was a "particularly egregious" violation of the noncompete agreement that he had signed when he joined Microsoft.

Tom Burt, deputy general counsel at Microsoft, said: "He has access to sensitive information, to trade secrets about our search technology and business plans and our China business strategies. He has accepted a position in direct competition with Microsoft in those areas."

Lee had been working most recently at Microsoft's Redmond headquarters, focusing on new search technologies. According to the lawsuit, for a time Lee had been the person "responsible for overall development of the MSN internet search application". He also served as a member of a company advisory board that focused on China-related strategies - a post that, according to the suit, gave him access to the company's business strategy and planned expansion targets.

In the suit, Microsoft said that on 5 July Lee informed his department head, Eric Rudder, that he did not plan to return to Microsoft from a sabbatical and that he had talked with Google about heading up that company's China efforts.

Burt said Microsoft was formally notified of Lee's plans on Monday and that the company served him with legal papers later that day.

"There was no effort by Dr Lee or Google to try and work out any kind of agreement," Burt said. "The combination of those factors meant that we really had no choice but to file this suit to protect our confidential information."

Ina Fried writes for CNET News.com. CNET News.com's Stefanie Olsen also contributed to this report.