Google Inc. and Microsoft Corp. said on Thursday they reached an agreement that settles their pending litigation that had barred a former Microsoft executive from heading up the Web search firm's research efforts in China.

Microsoft said that the former executive, Kai-Fu Lee, Google and Microsoft had come to a mutual agreement.

"Microsoft, Dr. Lee and Google have reached an agreement that settles their pending litigation," Microsoft said in a statement, adding that they "entered into a private agreement that resolves all issues to their mutual satisfaction."

Microsoft said that it and Google would make no further statements on the matter. The two companies are fierce rivals in the fast-growing and lucrative online advertising market. A Google spokesman was not immediately available to comment.

Google and Microsoft had been set to go to trial in January in a Washington state case, brought by Microsoft, that accuses Google and Lee of violating a non-compete agreement that Lee had signed with Microsoft.

Google responded with its own lawsuit against Microsoft, filed in U.S. District Court in San Jose, California.

Lee was hired away from Microsoft by Google in order to head up Google's research efforts in China.

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

In court testimony in September, Lee said he left Microsoft after becoming frustrated with the company's approach to doing business in China. Google lured him in part with a compensation package worth a reported $10 million.

A Washington state judge ruled in September that Lee could begin helping Google set up its operations in China, but placed tough restrictions on him, pending the January trial.

Source: CRI News/Reuters