Judge Stays Google Suit Vs. Microsoft in Hiring Case

SAN FRANCISCO – A judge ordered a tentative stay in Internet company Google Inc.'s (GOOG) suit against Microsoft Corp. (MSFT), according to a court Web site, dealing a blow to Google's legal fight over its hiring of a former Microsoft executive.

The parties are scheduled to appear before Judge Ronald Whyte in U.S. District Court in San Jose, California, Friday to make arguments in support of their respective motions in the federal case brought by Google.

Google's suit is attempting to override the jurisdiction of a Washington state court in a related action brought by Microsoft that accuses Google and manager Kai-Fu Lee (search) of violating a noncompete agreement that Lee had signed with Microsoft.

The stay order by the federal court, if maintained by Judge White, would set the stage for the Washington state case to go to trial on January 9, 2006, according to attorneys working for Microsoft.

Lee, 43, was hired away from Microsoft by Google in order to head up the Web search company's research efforts in China.

He had established Microsoft research and development center Beijing before moving to Microsoft's Redmond, Wash., headquarters to work on software that allows computers to process speech using conversational language.

Google has argued that California, a state that generally does not recognize noncompete clauses, is the proper jurisdiction for the legal dispute.

Microsoft's position is that Lee's employment contract was signed in Washington and that the deal contained a provision whereby issues arising from the employment contract would be adjudicated under Washington state law, its attorneys said.

In testimony last month, Lee said that he left Microsoft after becoming frustrated with the company's approach to doing business in China.

A Washington state judge ruled last month that Lee can begin helping Google set up operations in China, but placed tough restrictions on him, pending a trial scheduled for January.

Whyte's tentative order did not specify how long the suit would be stayed.