A confidential settlement between rivals Microsoft and Google regarding Google's hiring of Kai-Fu Lee to head up their operations in China once again has both sides claiming victory.

The settlement comes about three weeks before a much-hyped trial was scheduled to start in Seattle. The suit was to resolve the employment status of Kai-Fu Lee, a Microsoft engineer hired by Google last year.

Microsoft had won a temporary injunction in July regarding the enforcement of an employment contract that Lee had signed previously with Microsoft that barred him from working on technical projects for competitors. Legal experts suggested that in reaching a settlement, Google may have bought its way out of the non-compete contract, paying Microsoft a fee in order to be able to employ Lee before his non-compete employment agreement expired in July.

As the two giants compete for a bigger share of the Internet search market, Google's hiring of Lee away from Microsoft led to the suit. Google had hired Lee to be president of the company's operations at its new research center in Beijing.

The settlement leaves open in general termsthe question of such non-compete contracts. At this time, the settlement gives rise to the notion that the transfer of a critical employee to a competitor does appear to carry with it a certain amount of risk.