Google anticipated Microsoft legal tussle

When it hired Kai-Fu Lee away from Microsoft last month, Google anticipated the prospect of legal wrangling with its rival, according to court documents unsealed earlier this week.

Google in fact had devised a Plan B for Lee--12 months of paid leave in the event the executive is barred from working at the search giant because of a noncompete clause with his former employer, according to documents filed in King County Superior Court in Washington state.

Lee, who founded Microsoft's research lab in China and was hired by Google several weeks ago to launch its R&D center in the same region, is fighting the noncompete clause in the employment contract he signed with Microsoft in 2000.

Both Google and Lee are asking the court to find the noncompete clause invalid. But at a recent court hearing, the judge granted Microsoft's request for a temporary restraining order, prohibiting Lee from performing any duties at Google that are similar to those he performed at the software giant. The merits of the case will be weighed at a preliminary injunction hearing Sept. 6, with a trial set for January.

Lee's employment agreement with Google states: "If Microsoft successfully enjoins Kai-Fu Lee from working at both Microsoft and Google due to the non-competition and or non-disclosure provisions of the employment agreement...Google agrees to place Mr. Lee on a paid leave of absence or consulting engagement for the duration of the injunction, up to twelve months from the date of first employment with Google."

Google also agreed to pay a bonus and benefits during this one-year period, and allow Lee's stock options to vest as though he was actively working at the company, according to court documents.

Under Microsoft's employment agreement with Lee, the former executive is prohibited from working for a direct competitor for one year and prohibited from handling duties that are similar to the ones he performed at Microsoft.

A spokesperson for Microsoft declined to comment. Google did not respond to calls seeking comment. (Google representatives have instituted a policy of not talking with CNET News.com reporters until July 2006 in response to privacy issues raised by a previous story.)

Steve Ballmer, Microsoft's chief executive, views Google as a direct competitor and one he wants to overtake. Ballmer previously said the software giant will catch up to Google in the next six months in terms of "relevancy."