Google Sued by PayPal Over Mobile Payments Trade Secrets

Google Sued by PayPal Over Mobile Payments Trade Secrets

On the same day that Google unveiled its mobile payment service, Google Wallet, it was sued by PayPal. The suit claims trade secret misappropriation related to (what else) mobile payment systems.

Reportedly, the timing of the lawsuit was coincidental, in terms of Google's announcement. The Google executives targeted in the lawsuit were not: the suit named Osama Bedier and Stephanie Tilenius, who directly oversee Google Wallet. In addition, the pair led the unveiling of the payments system on Thursday.

Bedier is Google’s VP of payments and Tilenius is VP of e-commerce. They both formerly worked for PayPal, with Bedier working for nine years at PayPal, most recently serving as vice president of platform, mobile and new ventures. He joined Google on January 24 of this year. Tilenius was at eBay from 2001 to October 2009, also serving as a consultant to eBay until March 2010.

Among the details from the lawsuit:
  • According to the suit, Tilenius was under contract not to recruit PayPal employees. However, she messaged Bedier on Facebook, stating she had a “HUGE” opportunity for him, and sent him e-mails and SMS messages giving him advice while he interviewed for a Google position.
  • The suit added that Bedier also violated contractual obligations to eBay himself, by also soliciting and recruiting PayPal employees to work at Google.
  • It was rumored last year that Google and PayPal were set to roll out PayPal as a payment option for Android purchases. It was close enough to fruition, reports said, that it could have been unveiled within a few weeks. Bedier was in charge of the negotiations for PayPal. According to the suit, just as the deal was about to be signed, Google backed out, instead deciding it would be better to hire Bedier and create its own mobile payments system.
  • In late November, Google offered Bedier. He told PayPal about the offer on Nov. 1, adding that the job would be in mobile payments. PayPal executives told him it would be a huge conflict of interest due to "his knowledge of PayPal’s mobile payment, point of sale, and digital wallet in the cloud strategies as well as his knowledge of PayPal’s detailed assessment of Google’s mobile payment and point of sale strategies and weaknesses would as a matter of course misappropriate PayPal’s trade secrets" accept Google's offer. In December Bedier said he was committed to staying at PayPal, but on Jan. 24, 2011 he left for Google.
  • PayPal's suit also claims that Bedier has admitted he has confidential information on his personal computer, email account, and DropBox account, but that he hasn’t handed over that data, despite requests from the company.
The case is PayPal v. Google Inc. (GOOG), 11CV201863, California Superior Court, County of Santa Clara (San Jose).
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Leaving one company to work for another in the same field is not a "conflict of interest", and internal procedures do not in and of themselves constitute trade secrets. If PayPal's doing something with mobile payments that magically generates revenue in a way that a company of Google's resources couldn't have reasoned out for themselves, I'll be shocked (because it's probably involves something illegal).

Why is it that companies today aren't happy unless they can put a clause in your contract demanding that you have a pre-frontal lobotomy in the event that you get a job anywhere else you might use any of your training or years of accumulated experience?

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Also, it's about time we get an alternative in online payments to offer some competition to Paypal/Ebay, their fees are very high.

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