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Google: Microsoft suit could crimp China efforts

The search giant argues that a ban on Kai-Fu Lee assuming his duties this fall would hurt its efforts to recruit Chinese students.

Losing the services of Kai-Fu Lee for the rest of this year would have a profound effect on Google's recruiting efforts in China, the search engine company has argued in its legal battle with Microsoft.

In court papers filed last week, Google also claimed that Microsoft's lawsuit over Lee's defection is driven by the Redmond, Wash.-based company's fear that, because of Lee's "powerful reputation" among Chinese students, "many of the students both companies seek to recruit would go to Google, not Microsoft."

The two tech giants are locked in a complex and bitter dispute over Lee, who left an executive post at Microsoft in July to lead a new Google research and development center in China and serve as president of its Chinese operations. Microsoft promptly sued, claiming Lee would be breaking a noncompete agreement in assuming his new role.

A Washington state judge has temporarily barred Lee from performing work at Google that competes with what he did at Microsoft--including planning for the Chinese search market. The judge is slated to hear arguments next week on whether to extend the ban until a trial set for January.

The case is significant in part because it touches on the potentially immense Chinese Internet market. Besides Microsoft, Google also has to contend with fast-growing Chinese search company Baidu.com.

In court papers filed earlier this month, Lee and Google asked that next week's hearing allow oral testimony from witnesses. As a rationale for the motion, Google called the four-month period between next week's hearing and the case's Jan. 9 trial date "a very important window."

Google said its plan was for Lee to spend the latter portion of this year overseeing Google's recruiting efforts for its China research and development center, "with the bulk of the candidates to be evaluated and hired being Chinese university students from the class of 2006..."

"The 'recruiting season' for the class of 2006 occurs during the last quarter of 2005," Google said in its filing. "...Dr. Lee is a highly respected and influential person in China, particularly among Chinese students. If Dr. Lee is not permitted to recruit from the class of 2006 for Google, Google's efforts to staff its Chinese R&D center, and the overall progress of that R&D center itself, will be affected not just for the four months between the preliminary injunction hearing and trial, but for the entire next year, and beyond."

In its own court papers filed last week, Microsoft rejected Google's argument. "Google's claim of hardship...is not credible in that it knew that Dr. Lee's non-competition agreement might prevent him from working for Google in China for a year and agreed to hire him--and guarantee his pay and indemnify him--in light of that knowledge."

Microsoft's filing had opposed Google's request for a hearing with live witnesses, partly on the grounds that "it will be very difficult, if not impossible, to arrange for the attendance of all the witnesses named now or in the future by Dr. Lee..." on such short notice. But a Microsoft representative on Wednesday said next week's hearing will involve live witnesses.

A source close to the proceedings said Microsoft can only call Microsoft witnesses and Google can only call Google witnesses, though cross-examination will be possible.

A Google representative declined to comment for this story. (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.)