|EcommerceBytes-NewsFlash, Number 2552 - May 27, 2011 - ISSN 1539-5065 1 of 6|
eBay's PayPal unit filed a lawsuit against Google and two of its executives for misappropriating trade secrets and breach of contract on Thursday after the search giant announced its Google Wallet mobile payments initiative. PayPal alleges that former eBay and PayPal executives Stephanie Tilenius and Osama Bedier, now employed at Google, brought PayPal trade secrets to Google and recruited PayPal employees despite being contractually prohibited from doing so.
A Google spokesperson responded to AuctionBytes inquiry about the lawsuit by stating, "As we have not yet received a copy of the complaint and won't be able to comment until we've had a chance to review it."
PayPal is a critical part of eBay's business - it is expected to generate revenue of between $6 billion - $7 billion in 2013 - and PayPal is aggressively defending its claims to the "digital wallet" as it faces increasing competition in mobile payments.
What must be particularly galling to PayPal is that its star employee Bedier is now evangelizing Google Wallet. PayPal's lawsuit alleges that Bedier has been part of a Google team making sales calls to major retailers where he has allegedly been comparing Google's products and services with PayPal's products and services: "In particular, on information and belief, Bedier's comparisons incorporate PayPal trade secrets, including PayPal's schedule for deployment, anticipated features, and back-end approach to mobile payment, point of sale, and the benefits of a wallet in the cloud."
PayPal alleges that Bedier informed eBay and PayPal of his job offer from Google in November 2010 and said it informed Bedier that, "given 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, that Bedier would as a matter of course misappropriate PayPal's trade secrets if he were to take that position at Google."
The lawsuit also claims that PayPal had reached an agreement with Google for an Android deal in late February 2011, but that in April, Google scuttled the deal: "It was no longer interested in partnering with PayPal, but instead decided to build a competing product with PayPal's former employees and executives at the helm."
PayPal's lawsuit details alleged correspondence between Tilenius and Bedier as she allegedly recruited him using Facebook, email and Instant Messaging, and states:
"Bedier transferred up-to-date versions of documents outlining PayPal's mobile payment and point of sale strategies to his non-PayPal computer just days before leaving PayPal for Google on Jan 24, 2011."
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Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to firstname.lastname@example.org.
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