Paypal sues Google over mobile payment trade secrets

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

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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