Microsoft/Google Drama Glamorous, Not Unexpected

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It didn’t take a crystal ball for Google to foresee there would be trouble if it hired Kai-Fu Lee away from Microsoft.

As documents filed in the Superior Court of Washington for King County reveal, Google promised to defend the former Microsoft executive if Redmond’s lawyers came after him.

According to the addendum to Lee’s employment agreement with Google, publicly released in response to legal requests from the Seattle Post Intelligencer, Google agreed to pay Lee for a year if he was prevented from coming to work.

In addition to defending the suit, Google agreed to pay Lee his full salary, bonus and benefits for 12 months, and to either vest his stock options as though he were employed or to ”make him whole” for that loss.

After Google announced it had hired Lee to head a research lab in China, Microsoft immediately sued both Lee and Google, claiming breach of Microsoft’s employee confidentiality and non-compete agreements.

Google certainly anticipated the suit, said Vic Schachter, chair of the employment practices group at the law firm Fenwick & West.

”This is a very common and typical business dispute,” he said. ”There’s nothing unusual, except that it’s two very glamorous companies.”

John Challenger, CEO of executive outplacement firm Challenger, Gray & Christmas, said there are always concerns when high-level executives change jobs.

”Most executives in research or sales or many other roles will sign a non-compete agreement when they’re hired,” he said. ”However, the courts don’t allow a company to interfere with a person’s livelihood, so there’s a lot of case law around what you can put into those non-competes.”

Such agreements are valid tools, Challenger said, but state laws differ on their enforcement. He and Schachter agreed that California, Lee’s new place of employment, gives more weight to an individual’s right to earn a living, while Washington state, the home of Microsoft, tends to emphasize the interests of the employer that lost a key employee.

Schachter said that the vast majority of such suits never go to trial; usually the two parties reach a compromise.

The discovery phase of the trial could hinge on whether Lee was privy to Microsoft’s trade secrets — which can include strategy. ”Business strategy can be trade secrets, because they’re talking about new initiatives, new prod lines, new marketing techniques,” he said. But the key is that the company that claims a trade secret has to have treated the information like one.

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