Paypal sues Google over mobile payment trade secrets

Paypal sues Google over mobile payment trade secrets

Summary: PayPal and parent company eBay have alleged that Google has gained access to trade secrets by recruiting former PayPal head of mobile payments Osama Bedier

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TOPICS: Security
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PayPal has sued Google over claims the technology giant has misappropriated trade secrets related to its mobile payments technology.

Google Wallet

PayPal has sued Google over claims the web giant misappropriated trade secrets related to its mobile payments technology. Photo credit: Sarah Tew/CNET News

The payments company and parent eBay filed the suit (PDF) in Santa Clara superior court on Thursday, only a few hours after the unveiling of Google Wallet, which allows people to make payments in shops using their mobile phone.

The press event for Google Wallet in New York included presentations by Stephanie Tilenius, vice president of electronic commerce at Google, and her colleague, Osama Bedier, both of whom are named in the filing. There are also 50 unnamed defendants.

The suit alleges that Bedier, who until January was head of mobile payments at PayPal, divulged confidential information after he moved to Google to become vice president of platform, mobile and new ventures.

"In the course of his work at Google, Bedier and Google have misappropriated PayPal trade secrets by disclosing them within Google and to major retailers," the lawsuit said.

PayPal also said that Tilenius broke contractual obligations by poaching Bedier after she left her role as head of product at eBay in February 2010 and moved to Google.

"Google hired Bedier after another former eBay executive, defendant Stephanie Tilenius, solicited and recruited him," it said in its filing. "By doing so, Tilenius violated her contractual obligations to eBay."

In a statement on Friday, Google said it has not received a copy of the court documents. "We... won't be able to comment until we've had a chance to review it," the company said.

Confidential information

According to PayPal, Bedier shared details about eBay's mobile payment, point-of-sale and digital wallet technology with Google. It also claims he used confidential information to gain advantage in negotiations with potential customers that both Google and PayPal were courting. This information included PayPal's schedule for deployment and anticipated features, as well as knowledge of its back-end approach to mobile payment.

From 2008 to 2011, Google and PayPal, through Bedier, were negotiating a commercial deal with each other that would have seen PayPal serve as a payment option for mobile app purchases on Google's Android Market, the suit said.

On the cusp of the two companies reaching a deal, Bedier was hired away and the deal collapsed, according to PayPal.

eBay is seeking a permanent injunction to stop "future misappropriation of PayPal's trade secrets", plus a range of damages — compensatory, general, exemplary and punitive — against the defendants and Google. It is also asking for a royalty and court costs.

Google Wallet, which is expected to become available in the US in the summer, uses near-field communication technology (NFC) to allow payments by swiping a smartphone over a reader. It was introduced alongside a coupons scheme called Google Offers.

The payments service will initially only be available on Android-based Nexus S 4G handsets on Sprint. Google has partnered with MasterCard, FirstData and Citibank to deliver the service, which will be trialled in New York, San Francisco and Portland.


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Topic: Security

Tom Espiner

About Tom Espiner

Tom is a technology reporter for ZDNet.com. He covers the security beat, writing about everything from hacking and cybercrime to threats and mitigation. He also focuses on open source and emerging technologies, all the while trying to cut through greenwash.

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  • PayPal, Google, Schmoogle, whatever

    The rusting old hulk eBay is presently being kept afloat by PayPal so it’s good to see these boys squabbling and threats to the clunky PayPal coming thick and fast. It’s interesting times for all we eBay “haters” (oops, I mean “watchers”). I hope that someone has remembered to bring the popcorn.

    PayPal is mostly registered in various places only as a “money transmitter” (like Western Union), and PayPal actually claims that they are not a “payment processor”, and there is a minute degree of truth in that claim because it could be, nonsensically, claimed that they do no more than facilitate the transmission of money by riding on the back of the retail banks’ existing payments processing systems.

    In fact, the only thing creative about PayPal has been their use of users’ email addresses as an identifier for online transactions. PayPal is otherwise no more than a blood-sucking parasite on, and in the main cannot function except via, the retail banks’ existing payments system (via their banker, GE Money Bank).

    PayPal, outside of whatever will ultimately be left of the Donahoe-devastated eBay Marketplace, will undoubtedly eventually be consigned to the history books by all those same banks/Visa/Mastercard once those players get their “online” act together.

    Some people may not like the “banks” but all those participating banks at least supply a professionally run payments processing system; even PayPal concurs with that assessment: except for transactions between PayPal “accounts”, they use the banks’ existing payments processing system all the time and simply could not exist without it.

    Regardless, all the above comments apply equally to all of the other third-party “payments processors” that are emerging out of the woodwork and wanting to have access to your banking account. Unless they have formal arrangements with all the participating retail banks, as do the likes of Visa/MasterCard, then the result is invariably going to be as potentially problematic as is PayPal’s clunky operation for its merchants.

    All anyone needs to know about the clunky PayPal:
    http://forums.auctionbytes.com/vbulletin/showthread.php?p=165263

    Is that PayPal’s blood in the water, and are those “sharks” (oops, “banks”) I can see circling?

    Enron / eBay / PayPal / Donahoe: Dead Men Walking.
    anonymous