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.
"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," Microsoft said in its lawsuit, which was seen by ZDNet UK sister site CNET News.com. "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.
"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," Alan Eustace, Google engineering vice-president, said in a statement.
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.
Google's public announcement that it had hired Lee is in and of itself unique. The company rarely announces new hires, with chief executive Eric Schmidt's hiring being a notable exception.
Though workers leave tech companies for rivals all the time, it's not uncommon for a dispute to end up in court, particularly when an executive has a contract with a noncompete clause. Microsoft has turned to legal channels before to pursue former employees who it felt were unfairly competing against the company.
Notably, the company sued when former executive Tod Nielsen and a number of ex-Microsoft employees went to work for Crossgain, a start-up that was focused on allowing business applications to run over the Web.
Crossgain eventually disassociated itself from a number of Microsoft workers that were still bound to noncompete agreements. Among the other ex-Microsofties who were forced to step down, at least temporarily, were Nielsen and Adam Bosworth, a founder of Crossgain.
Crossgain was swallowed up by BEA Systems in 2001, with both Nielsen and Bosworth joining the software maker. The two left BEA last year, and Bosworth joined Google.
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.
"He has access to sensitive information, to trade secrets about our search technology and business plans and our China business strategies," Deputy General Counsel Tom Burt said. "He has accepted a position in direct competition with Microsoft in those areas."
Lee had been working most recently at Microsoft's Redmond, Washington, 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 that 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."
CNET News.com's Stefanie Olsen contributed to this report.
Talkback
Hang on! In sueing Google Microsoft claims that Kai Fu Lee violated his "non-competition" promise. What exactly are Microsoft competing with Google against? Not even through Bill's heaviest bouts of grandeur-delusion could Microsoft believe that their search engine competes with Google.
Despite the lawsuit, he could still be a mole. Blacklisting MS executives for two or three years ought to be encouraged to prevent undue influence in other areas of business or even government.
People like Howard Schmidt, for example, are maneuvered into place by Microsoft to promote their agenda from the inside. Why should we expect different treatment of competitors? Especially since MS has recently noticed Google and has begun a strategy against it.
MS even hurts Google by drawing out the lawsuit.
It is sad to see such sloppy reporting. Microsoft did not sue Crossgain and it isn't clear that they ever could have considering that the team was building an online service to enable on-demand computing, something Microsoft has never built. The team decided to take a leave to take the issue off the table and let the people at Crossgain move forward and focus since Microsoft was threatening a suit and it was distracting.
I don't think it is legal for anyone to sign a contract to give away their basic rights - i.e; in an extreme example - if I sign a contract that says "... if I quit you can shoot me." - that doesn't give any employer the right to shoot me - even if I subsequently quit.
Also any employer enjoys an unequal and arguably unfair bargaining position with the person entering into the contract since if the prospective hiree disagrees with these onerous clauses - they don't get the job, therefore it can be argued that there is an element of signing under duress that would weaken the employers position further.
At the end of the day, Microsoft should suck it up, hire or promote the next generation superstar for China ( ... Pssst, Hey Bill, I'm available - just email me) and get back into the game.
Competition will simply make both parties better and the consumers and both companies will benefit.
That's the beauty and strength of freedom and free enterprise - use it!
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