Microsoft May Have Gotten What It Wants in Google, Lee Lawsuit

By TED GLANZER
TMCnet Communications and Broadband Columnist

Injunction that Microsoft obtained in July has prevented former employee from working for Google and other competitors at least until September.

Even though the trial is not set to start until Sept. 6, Microsoft may have already won the battle in its legal dispute with Google and former employee Kai-Fu Lee, according to a California appellate attorney.

Indeed, the delay caused by the preliminary injunction alone may have been enough to prevent Google from receiving the full benefit of Lee's skills, attorney Robin Meadow told TMCnet in an interview.

"Time is on Microsoft's side," Meadow, a partner in the appellate boutique Greines Martin Stein & Richland said in a prepared statement.  "Even with an expedited trial, getting an injunction can mean winning the case.  Search technology is such a fast-moving area that even a several-month delay could seriously Google's ability to take advantage of Dr. Lee's expertise."

At the heart of the suit is the one-year non-compete agreement that Lee signed with Microsoft.  Companies have their employees sign non-compete agreements for a variety of reasons, mostly relating to protecting trade secrets. 

The net effect of such agreements is that they people from jumping ship and working for their former employer's competitors.

"You don't need non-compete agreements to prevent the disclosure of trade secrets," Meadow noted.

The enforceability of Lee's non-compete agreement hinges on a combination of factors, including how narrowly it is tailored and its duration.

Where the case is litigated is also extremely important, Meadow said.

That Microsoft got to court first is a big advantage for the Redmond, Wash.-based company.

Indeed, nearly every state, including Washington, will enforce non-compete agreements.  California, however, has a strong public policy against enforcing non-compete agreements, favoring a person's ability to pursue his or her livelihood, in addition to preventing trade restraints on future employers. 

"Google is trying to litigate the issues in California, where the law is very much more favorable to it," Meadow said in a prepared statement.  "But with Microsoft on a fast track to judgment in Washington, Google is up against a serious problem because of a key difference in the two states' laws.  A Washington judgment will be immediately binding on California courts, but the opposite isn't true: Even if Google were to get a judgment today in California, it would have to be affirmed on appeal in order to be binding in Washington."

The duration of the agreement is also a key.

While no court in the would enforce a lifetime non-compete agreement, according to Meadow, a company may need an agreement that spans several years to protect its rights.

Which is what makes the Microsoft/Google/Lee case so interesting.

"In the technology industry, you don't need a long [non-compete agreement] because technology moves so fast," Meadow said. "Search technology in particular is moving so fast that in a year, the world will look very different than it does now."

Meadow noted that spending one year out of the computer search arena could render Lee obsolete. 

"Lee's usefulness as an employee can be severely compromised," Meadow said. "That year is crucial."

Microsoft's argument, according to Meadow, appears to be that of inevitable disclosure.  In other words, it would be hard for Lee to do anything at Google that would not require sensitive knowledge that he obtained while working at Microsoft.

While the issue of inevitable disclosure has not been decided in Washington, a California appellate court has already rejected that argument, Meadow said.

If Microsoft is unsuccessful with the inevitable disclosure theory, then it will have to prove the existence of trade secrets and the risks that Lee will disclose such secrets.

Google has several arguments alleging that Microsoft is essentially engaging in the restraint of trade.  Specifically, Google is claiming that while he is brilliant, Lee is not that important to Microsoft because of the company's enormous size, Meadow said. 

Google will argue that Microsoft just does not want competition out there, Meadow said.

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Ted Glanzer is assistant editor for TMCnet. For more articles by Ted Glanzer, please visit:
http://www.tmcnet.com/tmcnet/columnists/columnist.aspx?id=100033&nm=Ted%20Glanzer

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