Non-competition Agreement Valid in Microsoft Corp v Kai-Fu Lee and Google Inc

Dr Kai-Fu Lee (Lee) had been a Vice-President of Microsoft since August, 2000 and was a party to a non-competition agreement. While still on a sabbatical, in July 2005, Lee was contacted and hired by Google as Vice-President of Engineering and as President of Google China. On September 13, 2005, the Superior Court of the State of Washington granted a preliminary injunction in favour of Microsoft enjoining both Lee and Google from certain activities in relation to Google's business in China. The injunction is both broader than the stipulation offered by Google and narrower than that requested by Microsoft. Until resolution of the action, Lee is enjoined from activities related to computer search, natural language process and speech technologies, and setting the budget, compensation levels or research direction at a proposed Google research facility in China and Google is enjoined from so employing Lee. Lee is also enjoined from soliciting Microsoft employees. Otherwise, there is no restriction on Lee from establishing and staffing a Google research facility in China. Two arguments by Microsoft not accepted by the Court are instructive to those drafting non-solicitation agreements. First, in 1998-99, Lee had been employed by a subsidiary of Microsoft to staff what is now Microsoft Research China. The Court found that confidentiality obligations with respect to such work expired in August 2001, apparently because the August 2000 agreement did not define "project" broadly enough to include projects undertaken for a subsidiary prior to the agreement. Second, notwithstanding Microsoft's allegation that Lee was "the face of Microsoft in China", the court found as a matter of fact that the agreement did not confer on Microsoft any right to control Dr. Lee's public image or personal relationships. Microsoft has purportedly offered to settle the suit, if Google agrees to abide by the injunction until expiry of the non-competition clause next in July 2006. For the preliminary injunction decision, see: http://online.wsj.com/documents/Microsoftgoogle20050913.pdf For news coverage of the decision, see: http://news.com.com/2100-1030_3-5862947.html For reports of the settlement, see: http://www.wired.com/news/business/0,1367,68854,00.html Summary by: Nicholas J. Whalen