The agreement, disclosed Thursday, ends two separate lawsuits over whether Lee violated his employment contract at Microsoft by joining a competing company within one year of his departure. Terms of the deal were not disclosed.

Lee's case became a symbol of the growing rivalry between the two technology giants and underscored their affinity for secrecy. Microsoft was worried that Lee, who had opened the company's research lab in China and was an expert in speech recognition software, would use inside information to give Google an advantage.

Lee was hired by Google in July to lead its business in China and was given a compensation package of nearly $10 million.

Google, the Mountain View search engine, would say little about the settlement, other than that it resolves all issues to the mutual satisfaction of all parties involved, including Lee. Microsoft said in a statement that it's pleased with the terms.

A trial on the matter was to begin Jan. 9 in King County Superior Court in Washington. A separate federal case filed by Google in San Jose to get Lee's noncompete agreement struck down had been put on hold by the judge there.

In a temporary ruling in the Washington case, a judge allowed Lee to start recruiting staff for Google's planned research and development center in Beijing. But he was barred from his other duties, including deciding the research strategy in China, setting the budget and working on search technologies.

It's unclear what work Lee can perform under the settlement disclosed Thursday.

Evidence that emerged from the case showed the animosity between Google and Microsoft, including an alleged tirade by Steve Ballmer, Microsoft's chief executive. A current Google employee recounted in a deposition that, after the employee disclosed plans to leave Microsoft, Ballmer tossed a chair across the room and vowed to kill Google. Microsoft later denied the incident took place.

E-mail Verne Kopytoff at vkopytoff@sfchronicle.com.

This article appeared on page C - 1 of the San Francisco Chronicle