Friday, May 27, 2011
PayPal Says Google Wallet Steals Trade Secrets
A lawsuit filed by PayPal alleges two Google executives who formerly worked at PayPal used trade secrets to create Google Wallet. Google pledged to fight PayPal's suit. The Google executives, Osama Bedier and Stephanie Tilenius, are also accused of luring away PayPal employees. An analyst said Google Wallet will probably get more lawsuits.
While Google Relevant Products/Services was outlining Google Wallet for mobile Relevant Products/Services payments, PayPal was readying a lawsuit against the search giant. eBay-owned PayPal filed suit against Google and two executives for allegedly stealing trade secrets that helped Google develop Google Wallet and push for a piece of the multibillion-dollar mobile-payments pie.
PayPal sued Google in the Superior Court of the State of California in Santa Clara County. The suit names Google and former PayPal employees and now Google execs Osama Bedier and Stephanie Tilenius.
Bedier previously was vice president of PayPal's mobile platform and came aboard as Google's vice president of payments in January 2011. Tilenius served in various executive roles at PayPal and eBay, including vice president of PayPal Merchant services, from 2001 to 2009, when she joined Google as vice president of commerce.
"Silicon Valley was built on the ability of individuals to use their knowledge and expertise to seek better employment opportunities, an idea recognized by both California law and public policy," Google said in a published statement. "We respect trade secrets, and will defend ourselves against these claims."
The PayPal complaint argues that Bedier had intimate knowledge of PayPal's capabilities, strategies, plans and market intelligence Relevant Products/Services regarding mobile payments and related technologies -- information constituting in part PayPal's trade secrets. "In the course of his work at Google, Bedier and Google have misappropriated PayPal trade secrets by disclosing them within Google to major retailers," the complaint alleges.
PayPal also asserts that Tilenius solicited and recruited Bedier to Google. By doing so, PayPal argues, Tilenius violated her contractual obligations to eBay. PayPal said Bedier also violated his obligations to eBay by soliciting and recruiting PayPal employees to jump ship to Google.
"In addition, from 2008 to 2011, Google and PayPal were negotiating a commercial deal where PayPal would serve Relevant Products/Services as a payment option for mobile-app purchases on Google's Android Market. During that time, PayPal provided Google with an extensive education in mobile payments," PayPal said in the complaint.
"Bedier was the senior PayPal executive accountable for leading negotiations with Google on Android during this period," it added. "At the very point when the companies were negotiating and finalizing the Android PayPal deal, Bedier was interviewing for a job at Google -- without informing PayPal of this conflicting position. Bedier's conduct during this time amounted to a breach of his responsibilities as a PayPal executive."
The movement of executives and other workers from company to company is hardly big news in Silicon Valley, said Charles King, principal analyst at Pund IT Relevant Products/Services, but if Tilenius sent Bedier an alleged Facebook note before she left PayPal, he's not sure how that could violate an order enforceable after she left PayPal for Google.
"The note could suggest that Tilenius was acting for Google prior to actually joining the company. But the reality of the workplace is people who are working for companies are actively talking about working for other companies before they leave. A lot of that has to do with the dates of when these events occurred and whether or not the no-solicitation order was enforced at the time that she sent this Facebook note."
The bottom line: Talk of electronic wallets and portable payments has been around for the better part of a decade. No company has made a truly viable business Relevant Products/Services based on the concept so far, but PayPal has made its moves and is clearly intent on protecting its intellectual property.
"As Google expands its area of interest and expertise beyond online advertising to enable electronic purchases of one sort or another, it's going to be touching live wires with any number of competitors with a major footprint in this area," King said. "It would be hardly surprising if future suits related to different kinds of electronic payments were filed against Google."