Google, Microsoft await final stay order in California

In the Microsoft, Google case over hiring Kai-Fu Lee, it looks likely a judge will make final a tentative order to stay Google's countersuit in California.

A judge in San Jose, California, heard arguments in Google's suit against Microsoft, but did not make a final decision as to whether a tentative ruling made the previous day in the case would stick, according to lawyers from both companies.

Thursday, Judge Ronald Whyte issued a tentative ruling in a U.S. District Court in San Jose to grant Microsoft's motion to stay, or put on hold, Google's case in California. The suit was filed in response to an earlier suit by Microsoft against Google and a former Microsoft employee, Kai-Fu Lee, over charges that Lee violated a noncompetition clause between him and Microsoft when he took a position at Google.

Google originally filed the California case in a state court but it was moved to a federal court July 29 at Microsoft's request.

Predictably, both companies Friday expressed optimism about the final ruling Judge Whyte will hand down. The judge did not specify when he would enter his final order.

According to Karl Quackenbush, lead attorney for Microsoft, it appears a tentative order filed Thursday granting Microsoft's motion to stay the case in California and allow Microsoft's case against Google in Washington state to proceed, will be made final.

"We're very pleased and encouraged by the tentative order granting Microsoft's motion," Quackenbush said in an interview following the San Jose hearing Friday. "If entered as a final order, which we hope and expect it will be, the Washington case will proceed on its expedited schedule."

However, Google litigation counsel Michael Kwun said Friday that the judge appeared interested in hearing arguments from both sides about the implications of staying the case or granting Google's request to declare the noncompete clause unenforceable under California law.

"We were pleased that the court seemed to be interested in the issues," he said. "It seemed to me that [Judge Whyte] wasn't sure which way to go. We trust he'll pay close attention to the arguments we raised and we look forward to his ruling."

Microsoft filed a lawsuit July 19 in a Washington state Superior Court over Google's hiring of Lee to spearhead new research and development efforts in China.

Google filed its California countersuit asking the court there to let California law apply and nullify the noncompete agreement. California laws are more lenient than Washington state laws in terms of how binding noncompete agreements are.

Quackenbush said Judge Whyte in court Friday asked Google lawyer Stephen Taylor why Google has not asked the judge in the Washington case, Judge Steven Gonzalez, if California law could apply in that case.

"[Google's] answer was unclear," Quackenbush said. Google so far has not brought that question before the Washington court, he added.

Google's Kwun said he did not remember the judge directing that specific question to Google, but said that Judge Whyte did ask questions about how the issue Google raised in California could be raised in the Washington case.

Robin Meadow, a partner in Los Angeles law firm Greines, Martin, Stein & Richland, said it makes sense that Judge Whyte would allow the case in Washington to go on, since there already have been proceedings in that case and the decision in Washington could supersede any decision in California anyway.

"You could see why the California judge is saying, 'This action is well under way in Washington, its decision may well be controlling, why would I waste my time?'" he said.

Meadow has said previously that if Microsoft wins its case in Washington, it can be applied as reason to throw out Google's suit in California because a Washington state judgment is binding in California, but the reverse is not true until an appeals process takes place. Only after that process will a California judgment be binding in another state, but a judgment in a Washington court can be binding in California as soon as it is handed down.

At this point, it appears Microsoft will get its expedited trial in its home state, a move that seems to favor the software company, Meadow said. "Certainly it looks like Microsoft has the upper hand at this point," he said.

Quackenbush said Microsoft is optimistic about the outcome in Washington because "that court has ruled twice in our favor."

Judge Gonzalez has granted a temporary restraining order requested by Microsoft that banned Lee from performing his duties at Google, but later filed a ruling that allowed Lee to work at Google in a limited capacity. The judge also granted Microsoft's request for an expedited trial in Washington.

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Elizabeth Montalbano

IDG News Service
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