DailyTech - PayPal Sues Google for Misappropriated Trade Secrets/Contract Violations

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Internet PayPal Sues Google for Misappropriated Trade Secrets/Contract Violations
Tiffany Kaiser - May 27, 2011 11:41 AM

14 comment(s) - last by FlyBri.. on May 30 at 2:46 PM

(Source: auctionbytes.com)

Two ex-PayPal employees, who now work for Google, have allegedly shared PayPal trade secrets with Google and wrongfully recruited PayPal employees

PayPal has sued Google over claims that ex-PayPal executives, who now work for Google, have misappropriated PayPal trade secrets by sharing them with Google as well as other large retailers.

PayPal Inc., a rapidly growing unit at the online marketplace eBay Inc., is suing tech giant Google after two ex-executives allegedly abused PayPal trade secrets and violated contractual obligations.

According to the case, Stephanie Tilenius, an ex-PayPal executive, left PayPal to work for Google in 2009. She was under contract not to recruit PayPal employees once she left, but later sent Osama Bedier, another now ex-PayPal executive, a message on Facebook offering a "huge" job opportunity at Google. She also e-mailed and text messaged him during his interview process to give advice.

But Tilenius' violation of contractual obligations is just the tip of the iceberg. PayPal also claims that Bedier, once entering Google, wrongfully stole and shared confidential PayPal information. The complaint states, "Bedier and Google have misappropriated PayPal trade secrets by disclosing them within Google and to major retailers." PayPal's complaint also mentions that Bedier has guided Google's attempts to "bring point of sale technologies and services to retailers on its behalf."

Bedier allegedly directed discussions to make PayPal a payment option on Google's Android Market while also talking about a job with Google, which he did not disclose to PayPal. PayPal saw this as a "breach of his fiduciary duty."

With both PayPal and Google pushing for mobile payment systems, the competition is heating up, and no one wants to be left behind. For instance, Verizon Wireless, AT&T Inc. and T-Mobile USA teamed up in a joint venture with Discover Financial Services' national payment network to form Isis, and Google announced "Google Wallet" in New York just yesterday.

Google Spokesman Aaron Zamost said that the company has not received a copy of the suit yet, and cannot comment until it does.

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This could cost Google big time

By Beenthere on 5/27/2011 1:48:44 PM , Rating: 1

There is no way Google will get away with using PP technical secrets. This might cost google big time.

RE: This could cost Google big time

By cjohnson2136 on 5/27/2011 1:50:19 PM , Rating: 3

They should actually go after the two employees since they broke contract.

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RE: This could cost Google big time

By Mitch101 on 5/27/2011 2:02:05 PM , Rating: 2

You go for all of the above and win wherever you can.

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RE: This could cost Google big time

By Fracture on 5/27/2011 2:48:07 PM , Rating: 5

Just a few things -

1) They're executives, and likely have little technical expertise and therefore would be unable to share trade secrets that aren't obvious.

2) Most non competes are for a limited term, such as 1 year. In this case, if the first executive wasn't the hiring manager, the non compete can't be enforced.

3) Suing is the telltale sign of a company in trouble - those who no longer innovate, litigate.

Also - California has a public policy that holds non compete agreements to be illegal and unenforcable. Where is Google headquartered again... oh yeah.

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RE: This could cost Google big time

By semiconshawn on 5/27/2011 3:08:41 PM , Rating: 3

1. You really think high placed executives have no access to trade secrets? Who cares if they understand it they just have to steal it to make it illegal.

2.People were hired prior to one year. In fact paypaly is accusing one of the execs of negotiating with google for a job at the same time as negotiating a deal for google to use paypals services. This exec also being accused of recruiting (not hiring) other paypal execs and downloading to a private computer confidential IP documents prior to leaving for google.

3. Apple, Microsoft, and Google are all on the plantiff side of lawsuits. Are they in trouble. No.

Also - Public policy is not law....Not even in California.

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RE: This could cost Google big time

By semiconshawn on 5/27/2011 11:02:20 PM , Rating: 2

Also
Paypal sucks. Google is sucking more and more everyday. Microsoft seems uhh.. nice? and at least you know Apple is screwing you...I love tech.

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RE: This could cost Google big time

By FlyBri on 5/30/2011 2:46:24 PM , Rating: 2

Just to clarify -- non-competes in California are ILLEGAL, period. There are only two instances where they are legal -- when it deals with partnerships, and if the person is selling interest in the company...that's it. Since it sounds like neither of these apply to this case, then the non-compete is null and void.

Regarding the other part of the lawsuit, if there is actual proof that they did somehow have trade secrets and illegally pass them on to Google, then that is something Google and those employees should be worried about.

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