Google Vice President of Payments Osama Bedier demonstrates how Google Wallet will work during a news conference May 26, 2011, in New York. Google wants the smartphone to be the wallet of the future, a container for digital credit cards, coupons, receipts and loyalty cards that can be "tapped" to terminals in stores. Mary Altaffer/AP
Updated: May 27, 2011 at 13:43 p.m. EDT with new details on the developing story.
Online payments giant PayPal has sued Google, alleging that two of the search titan?s senior executives who had previously worked at PayPal violated their contracts, and in one case actually stole confidential PayPal information and shared it with Google and other companies.
The two executives in question, Osama Bedier and Stephanie Tilenius, are now in charge of Google?s mobile-payments initiative, called Google Wallet, which the search giant announced at a press conference in New York on Thursday. Although the lawsuit does not refer to Google Wallet by name, there is an extensive discussion of the nascent ?digital wallet? market (.pdf) and of Bedier?s work in this area for PayPal before he joined Google in January.
PayPal?s lawsuit injects a dose of acrimony into what is quickly becoming a fiercely competitive race for advantage in the rapidly expanding mobile-payments market. Large corporations, from Silicon Valley to Wall Street, are jockeying for position and PayPal?s lawsuit appears intended, at least in part, to short-circuit Google?s ambitions in this arena.
As usual with Google, the company?s ambitions are high-flying. At the New York launch, Google said it had lined up several top-tier corporate partners to help roll out Google Wallet, which is based on NFC technology, including Citi, MasterCard, First Data and Sprint on the technology side, and Macy?s, Subway, Walgreens and Toys ?R? Us on the retail side.
In a company blog post, PayPal, a wholly owned subsidiary of online auction site eBay, said it didn?t really want to file the lawsuit because it prefers to ?compete and innovate, serving our customers by offering the best way to pay and be paid.?
But the company said it had little choice.
?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,? Amanda Pires, senior director at PayPal for global communications, said in the blog post.
A Google representative said the company plans to defend itself against PayPal?s lawsuit.
?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,? the Google representative said in an e-mailed statement.
It?s clear that PayPal takes this matter extremely seriously, and it has brought out the big guns for what could be a long and unpleasant legal battle.
?Despite the relatively recent development of the use of a smartphone as a point-of-sale transaction device, PayPal?s trade secrets are particularly valuable in this emerging area,? PayPal said in its lawsuit, which was filed in San Jose, California, by the company?s legal team, led by legendary Silicon Valley ace counsel G. Hopkins (Hop) Guy, III, of Orrick, Herrington, & Sutcliffe.
?We treat PayPal?s ?secrets? seriously, and take it personally when someone else doesn?t,? PayPal?s Pires wrote.
PayPal charges that Bedier, who led much of Thursday?s Google Wallet launch, violated his contract by engaging in employment talks with Google, even as he led negotiations aimed at incorporating PayPal into Google?s Android Market, an app store for mobile devices. Further, and perhaps most seriously, PayPal alleges that Bedier ?misappropriated PayPal trade secrets by disclosing them within Google and to major retailers,? upon joining the search titan.
As for Tilenius, PayPal alleges that she violated her contract with the company by recruiting Bedier to Google, breaking an agreement she made not to poach her former colleagues. PayPal charges that almost immediately after being named to run Google Commerce & Payments group, Tilenius ?embarked on a campaign to hire Bedier away from PayPal,? in violation of her contract with her previous employer.
In the lawsuit, PayPal quotes from a Facebook message it alleges Tilenius sent to Bedier while he was still at PayPal. ?I heard from a little birdie that you might be open to bigger and better challenges, I have a HUGE opportunity for you, would love to chat if you are interested,? PayPal quotes Tilenius as writing to Bedier.
Additionally, PayPal charges,?in further breach of her contractual to obligations to eBay, Tilenius endeavored to recruit additional PayPal personnel through Facebook messages, in person and by providing Google recruiters with names and personal contact information of key PayPal employees.?
Google declined to comment beyond its statement.
See Also:
Source: http://www.wired.com/epicenter/2011/05/paypal-sues-google-wallet/
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