Google Inc.'s attempt to have the lawsuit over its hiring of a former Microsoft Corp. executive tried in California suffered a major blow late Thursday as a federal judge issued a stay order. As a result, the case will be heard in Washington state as originally planned, an advantage for Microsoft.
The dispute is over the July hiring of Kai-Fu Lee, formerly a corporate vice president with Microsoft, and an expert in speech recognition, by Google. Microsoft quickly filed a lawsuit asking the courts to enforce the confidentiality and noncompete agreements Lee signed when he began working for Microsoft.
In its suit, Microsoft alleged that Lee had knowledge of trade secrets concerning its search engine strategies, as well as its operations in China.
Although Judge Ronald Whyte 0f the U.S. District Court, Northern District of California, had issued a temporary order two weeks ago to stay Google's motion for a change of jurisdiction, he took until Thursday to hear testimony from both sides and generate his ruling. The result is that any action in California will have to wait until the Washington trial, scheduled to begin January, 2006, wraps up. Washington's courts typically view noncompete agreements more favorably than California's.
Noncompete agreements are typically considered to be unenforceable in California, a big reason Google wanted the case heard on its home turf. "Every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void," reads California law.
But on Thursday, Judge Whyte noted that "Google and Lee fail to explain why they cannot ask the Washington state court to apply California law" in his stay explanation. Microsoft applauded the move. "This decision means that our case against Dr. Lee will proceed in Washington," a Microsoft spokesman said in a statement.
"We would have preferred a ruling on the merits from the California case, but look forward to continuing to litigate the case before the Washington court," Google said in a competing statement.
Lee has already begun working in Google's China operations, although under restrictions imposed by a Washington state judge.