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Judge to rule Tuesday in Kai-Fu Lee case

A Washington state judge says he will rule Tuesday on whether the former Microsoft worker can begin setting up Google's China operation.

Ina Fried Former Staff writer, CNET News
During her years at CNET News, Ina Fried changed beats several times, changed genders once, and covered both of the Pirates of Silicon Valley.
Ina Fried
3 min read
SEATTLE--A Washington state court judge plans to issue a ruling Tuesday on whether former Microsoft executive Kai-Fu Lee will be allowed to immediately begin setting up a China development center for Google.

After hearing two days of testimony this week, Judge Steven Gonzalez said late Wednesday that he would review the evidence and issue his decision both in court and in writing on Tuesday morning.

In closing arguments earlier in the day, Microsoft asked the judge to prevent Lee from starting work before a January trial, arguing it would violate a one-year, noncompete agreement that Lee signed when he became a Microsoft vice president in 2000. Google, meanwhile, argued that a proper reading of the contract does not prevent him from doing recruiting work in China.

Google announced plans in July to hire Lee to start its China research and development center, but Microsoft immediately filed suit to block the move. Later that month, Gonzalez issued a restraining order preventing Lee from such work until this week's hearing.

Much of the debate Wednesday afternoon centered on whether Lee has been doing recruiting for Microsoft in China during the past five years, and if so, whether such efforts constitute a competing "project" as defined by the noncompete clause. Google has stipulated that Lee won't work in the areas of speech recognition, search technology or natural language processing until the January trial, though debate over whether he can take part in those areas may resurface in those hearings.

As part of its cross-examination of Lee on Wednesday, Microsoft showed a timeline of meetings Lee had with other senior executives regarding China during the same time he was discussing a job with Google.

Microsoft argued that even though Lee was not formally responsible for China, he served as a key advisor and had access to confidential information about Microsoft's business plans there.

"He was a key advisor about China," said Karl Quackenbush, one of the attorneys representing Microsoft. Quackenbush noted that Lee was the "executive sponsor" for China research efforts, had sat on a China Redmond Advisory Board and had also been tasked with Microsoft's efforts to outsource work to China.

Lawyers for Google stressed that despite Lee's interest in China, he lacked the position at the company and the authority to make decisions. "He could kibbutz at most," John Keker told the judge in his closing argument. "He didn't run China. Other people did," Keker said at another point. Keker also noted that of the 800 workers hired by Microsoft in China in recent years, none was recruited directly by Lee and only three were interviewed by him.

Microsoft argued for a broader definition of recruiting, citing testimony from Lee and Google Vice President Alan Eustace in which both identified university relations, government relations and other tasks as all part of the recruiting process.

Lee was also the public face of Microsoft's recruiting effort in China, even if he was not the one hiring workers, Quackenbush said. "He ought not to be the public face of Google" in its efforts, he said.

Google also argued that recruiting was not a legally protectable project, under the narrow interpretation required by Washington state law. "The law doesn't permit Kai-Fu Lee from working in his beloved China," Keker said.

Microsoft lawyers also made much of the fact Lee shared with Google executives a document Lee had written at Microsoft titled "Making it in China: Strategic Recommendations for Microsoft." Lee had removed a section with specific suggestions for Microsoft, but lawyers for the software maker said it was not up to him to decide whether to release it.

"That should not have been shared with Microsoft's China competitor, Google," Quackenbush said in his closing argument. Lee maintained that nonconfidential versions had previously been shared outside the company by Lee as well as at least one other contributor to the document.

Credibility also emerged as an issue in the trial. Earlier in the day, Lee told the judge that he had been honest, but did not necessarily give a complete answer when he told his boss in June that he planned to return to Microsoft following a sabbatical. Meanwhile, Keker challenged Microsoft Chairman Bill Gates, saying the executive had claimed that there were three separate one-on-one meetings with Lee to discuss the subject of search, when, Google argues, none actually took place.