Microsoft, Google and Lee Settle Hiring Dispute

Some five months after Google announced plans to open a product research and development center in China, and said it was appointing former Microsoft vice president Kai-Fu Lee to head the operation, the parties have settled the matter.

In a brief statement released late Thursday, Microsoft spokesman Jack Evans said the parties had entered into a private agreement that resolved all issues to their mutual satisfaction.

He also declined to give any details on the agreement, saying the terms were confidential and that all parties had agreed to make no other statements to the media regarding it.

However, he did say that Microsoft was "pleased with the terms of our settlement with Google and Dr. Lee."

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David Drummond, Googles vice president of corporate development and its general counsel, would only say that while the trial date has been set for January 9, 2006 between Google, Dr. Kai-Fu Lee and Microsoft regarding the one-year non-compete period, "the parties have entered into a private agreement that resolves all issues to their mutual satisfaction."

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For his part, Dr. Kai-Fu Lee, who is the president of engineering, product and public affairs for Google China, echoed those sentiments, saying "I am pleased with the terms of the settlement agreement."

Directions on Microsoft analyst Michael Cherry told eWeek on Thursday that he was not surprised by the settlement move as neither side really wanted a prolonged court battle.

"No one wins when that happens and none of the parties had much to gain from allowing that to happen here," he said.

While it was unclear who had pushed for a settlement in this case, Cherry pointed out that Microsoft had been settling "an awful lot of cases lately. They are very pragmatic and always look at the upside and downside of cases like this," he said.

The brouhaha started in mid-July when Google said that it had appointed Dr. Lee to head its product research and development center in China. The very next day Microsoft said it was filing a lawsuit against Lee and Google, claiming breach of both employee confidentiality and non-compete agreement.

"We are asking the Court to require Dr. Lee and Google to honor the confidentiality and non-competition agreements he signed when he began working for Microsoft," Microsoft said at the time in a corporate statement.

Lee was not the first high-profile Microsoft executive to go to Microsoft rival Google. Late last year, one of Microsofts key Windows architects, Marc Lucovsky, defected to Google.

Lucovsky was one of a handful of "Distinguished Engineers" at Microsoft.

He is credited as one of the core dozen engineers that came from Digital Equipment Corp. to Microsoft and built the Windows NT operating system. He was charged with building the Windows NT executive, kernel, Win32 run-time and other key elements of the operating system. NT was the precursor to Windows Server.

Then, in August, it was revealed in newly unsealed documents in the battle over Googles hiring away from Microsoft of Kai-Fu Lee, that Google anticipated it would have a fight on its hands before making the move. The latest details could end up helping Microsoft in its suit to block Lee from working for Google.

And, in September, a sworn statement by former Microsoft staffer Locovsky, said that Microsoft CEO Steve Ballmer wants to kill Google.

Ballmer allegedly threw a chair to emphasize his point, something he denied in an interview with eWeek earlier this year.

"The whole declarations from Lucovsky was a gross, gross exaggeration," said Ballmer in the interview. "Did I want him to leave? No, I did not want him to leave. Do I throw chairs? Ive never thrown a chair. Ive just never thrown a chair. That was a gross exaggeration. Lets leave it at that."

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