PayPal says Google stole its Wallet (UPDATED)

May 26, 2011 | by James Wester

(UPDATED) Claiming on its company blog that spending time in a courtroom isn't its thing, PayPal quickly followed Google's announcement of its new online payment method by filing a lawsuit against Google for stealing trade secrets and poaching employees.

The lawsuit names Google Inc. and two senior Google executives, Osama Bedier and Stephanie Tibelius, as defendants in the suit. Bedier and Tibelius were key figures in the launching of Google's new mobile payment product, the Google Wallet. Bedier is currently VP of Google's payments group. Tibelius is Google's VP of commerce and payments. Both Bedier and Tibelius were a part of PayPal's mobile payments program prior to joining Google.

In a blog post referring to the lawsuit, Amanda Pires, senior director of global communications for PayPal, said the company was reluctant to file the lawsuit, but that "sometimes the behaviors of people and competitors make legal action the only meaningful way for a company to protect one of its most valuable assets — its trade secrets."

PayPal claims the two companies negotiated a deal over a two year period where PayPal "would serve as a payment option for mobile app purchases on Google's Android Market." According to the lawsuit, Google killed the deal late last year, recruited Bedier away from PayPal and set out to create its own payment method using Bedier's inside knowledge of PayPal's efforts to further the project.

The suit alleges Bedier, in his new role as head of Google's mobile payments efforts, has, among other things, "misappropriated PayPal trade secrets by disclosing them within Google and to major retailers." The suit claims Bedier's understanding of PayPal's plans were used to help Google recruit retailers to participate in the Google Wallet. The suit also alleges that Tilenius, who left PayPal in 2009, encouraged Bedier to join Google, violating an employment contract she signed with PayPal.

PayPal is seeking, among other things, a "reasonable royalty" from Google for the use of its trade secrets. The company has posted the entire lawsuit on its blog.

UPDATE: Google has responded to the lawsuit with the following statement:

"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. We respect trade secrets, and will defend ourselves against these claims." 

Topics: Card Brands , Carriers / Operators , Contactless / NFC , Handsets / Devices , Mobile/Digital Wallet

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