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[July 22, 2005]
Google countersues Microsoft over researcher
By MICHAEL LIEDTKE
AP Business Writer
(AP) -- Google Inc. countersued Microsoft Corp. Thursday in a legal battle over a prized research engineer that illustrates the escalating tensions between the technology titans.
The tussle began earlier this week after Google -- the maker of the Internet's most widely used search engine -- raided Microsoft's management ranks by hiring Kai Fu-Lee to open a new research and development office in China.
Redmond, Wash.-based Microsoft, the world's largest software maker, promptly sued Google and Lee in Washington state court, alleging a noncompete agreement that the engineer signed in 2000 prevented him from defecting.
Google retaliated with its own complaint in California seeking to override Microsoft's noncompete provision so it can retain Lee. In its suit, Mountain View-based Google contends the clause violates California laws giving workers the right to change jobs.
Microsoft's restriction is "clearly an illegal restraint of trade," Nicole Wong, Google's associate general counsel, said in an interview Thursday night. "Google is trying to create an environment for innovators. Microsoft is focused on litigation and intimidation."
Microsoft spokeswoman Stacy Drake McCredy described Google's complaint as a desperate act. "Microsoft is confident in our case and that Google's legal maneuvers will ultimately be rejected by the court," she said.
Google's hiring of Lee triggered a conflict because he had been working on Microsoft's efforts to improve its own search products as a vice president in the software company's interactive services division. He also had been helping Microsoft devise its China strategy.
In its complaint, Google argues California laws should apply because its headquarters -- and most of its nearly 4,200 workers -- are in the state. What's more, Google said Lee already is registered to vote in California, pays taxes in the state and plans to buy a Silicon Valley home.
But Google's initial announcement of Lee's hiring made it sound as if the engineer will be based in China, overseeing the company's new research office there.
"I look forward to returning to China to begin this exciting endeavor," Lee said in a Tuesday statement.
Lee signed his noncompete agreement in Washington, where he worked for Microsoft. Before joining Microsoft, Lee worked at two Silicon Valley companies, Silicon Graphics Inc. and Apple Computer Inc.
"Google is attempting to manufacture California residency for Dr. Lee in a poorly disguised effort to evade Washington law and renege on the agreement Dr. Lee made to Microsoft," Drake McCredy said.
As Google has grown more powerful since its inception in 1998, Microsoft has become increasingly determined to muscle its way into the lucrative search engine market with its own technology. The company unveiled its first internally developed search engine last year on its MSN.com site.
Until this week, Google had been publicly downplaying its rivalry with Microsoft, maintaining that the increased competition in the search engine industry would be good for everyone by fueling more innovation.
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