Kai-Fu Lee raised his arms, just for a second, in court yesterday and made a two-fingered "victory" sign with each hand. That, along with his...

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Kai-Fu Lee raised his arms, just for a second, in court yesterday and made a two-fingered “victory” sign with each hand.

That, along with his grin, resulted from a King County Superior Court judge deciding that the former Microsoft executive, who jumped ship to Google, was free to recruit prospects in China for his new employer.

Lee said he was going to report to work at Google’s headquarters in California today, the first time in nearly six weeks. Within a week, he’ll fly to Beijing to begin establishing the company’s first research center in China.

“I feel great,” he said outside the courtroom. “I’m ready to start work. I can’t wait to start work.”

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For now, what he can do may be more limited than he had first planned, before Microsoft sued Google over Lee’s hiring.

In a case closely followed in Redmond and in China, Judge Steven Gonzalez said yesterday Lee can do only some of the things he was hired for, until a January trial takes up the issue.

Lee can establish and recruit for Google’s Chinese research facility, but he cannot perform a number of other tasks, including setting the budget, research agenda or salary levels for the China operation.

Both sides claimed some degree of victory after the ruling. Lee said it would have no effect on his China work, because he had planned all along to focus on recruiting.

Microsoft attorney Tom Burt said the ruling severely limits the work Lee had intended to do. Google didn’t agree to pay Lee $10 million over four years just to interview college students and find office locations, Burt said. “This was a victory for us,” he said.

At the crux of a case that highlights the companies’ bitter rivalry is an employment contract Lee signed when he was promoted to executive status at Microsoft in 2000.

In that contract, he agreed that if he were to leave Microsoft, he would do no competing work for a year.

The contract was central to the suit Microsoft filed in July when Google announced it had hired Lee to run its China operations. The work would be too similar to what Lee had been doing at Microsoft, the company said.

Google responded that Lee would mainly be recruiting for the China office, something he hadn’t done at Microsoft in years.

Late yesterday, chief Microsoft lawyer Brad Smith said the company would settle the suit if Google agreed to follow Gonzalez’ ruling until Lee’s noncompete period ends in July.

“We can avoid a trial and get back to work,” Smith said. “We say we like this [ruling] and we’re prepared to match our words with concrete steps forward.”

Smith said one of Microsoft’s outside lawyers was trying to reach Google’s lawyers with the proposal.

Google spokesman Steve Langdon said his company had heard about the offer only from reporters, not Microsoft.

“If they have something they want to discuss, we’d be happy to learn more about what they’re offering,” he said.

For Microsoft employees now pondering the strength of their own noncompete contracts, the case won’t have much impact, one employment attorney said yesterday.

Gonzalez essentially upheld the validity of Lee’s noncompete agreement but construed it very narrowly, said Washington, D.C.-based attorney Michael Stevens. “The judge gave something to each party here,” he said.

Another lawyer said the high profile of the case, not to mention the expense of such litigation, may discourage some companies from luring employees away from rivals.

“It could have a chilling effect on doing that, unless the person is of such a level and viewed as so important,” said David Reis, a San Francisco-based employment lawyer.

Gonzalez wrote in his ruling that Lee could establish the China facility, hire people, offer general advice about doing business in China and speak to public officials and university professors about recruitment.

But, the judge said, Lee couldn’t recruit from Microsoft or use the company’s confidential information.

Additionally, Gonzalez said Lee couldn’t do work that competes with Microsoft, including search, natural language and speech technologies. He also must not set Google’s China office’s research and development agenda.

In his ruling, Gonzalez chided Lee for taking some actions Microsoft had complained about in court.

Microsoft said Lee had been on a sabbatical while pursuing a Google job and had told his colleagues he would return even when he knew he would quit.

Lee misled Microsoft about his intentions, Gonzalez wrote, and continued to have access to Microsoft’s confidential information after deciding to leave.

Microsoft also said Lee gave Google confidential data while he was still an employee, including a paper he had co-authored, “Making it in China.” Lee said he gave Google the paper only after removing information specific to Microsoft.

Gonzalez wrote that Lee “confused the difference” between disclosing the information for his own benefit and for Microsoft’s benefit.

The judge’s ruling applies until January, when a trial is expected to look more thoroughly at the dispute.

Lee said yesterday he was fine with not being able to set a budget or agenda for the China office, because most of the students he will recruit won’t start work until next summer.

But the recruiting season starts soon. In fact, students in China have already organized an Oct. 1 party in his honor.

The case has received so much attention in China that many more people there know about him now, Lee said.

He praised Google for its support and took a parting shot at Microsoft, a company that he testified ignored many of his recommendations for doing business in China.

“I like the corporate values [at Google],” he said. “I like the cool products Google has built. I like the fact that Google is willing to take my advice on how to be successful in China.”

Kim Peterson: 206-464-2360 or kpeterson@seattletimes.com