SANTA CLARA, Calif. – Hours after Google unveiled its new eWallet payments solution yesterday PayPal greeted the unveiling with a lawsuit claiming the search-engine giant misappropriated trade secrets from PayPal's mobile-payment business.
PayPal claims the Google executive leading the new mobile payments effort, Osama Bedier, who worked for nine years at PayPal, "misappropriated PayPal trade secrets by disclosing them within Google and to major retailers."
PayPal filed the suit in federal court here hours after Google introduced Google Wallet, a new service that allows users to pay for things via a smartphone app.
Google Wallet will let users tap a credit card on an Android smartphone screen, then tap the phone to a restaurant or store credit card reader to make payments. Google will sell ads and offer coupons along with the service. Google plans to launch the service in San Francisco and New York this summer before going national.
The PayPal suit comes as the race for dominance in the growing mobile payments market has a accelerated this week, first with banking giants JP Morgan Chase, Bank of America and Wells Fargo introducing their own proprietary P2P offering called clearXchange, then with Wescom Community CU’s Wescom Resources Group introducing a deal to offer PayPal’s P2P service to credit unions.
The suit accuses Stephanie Tilenius, another former PayPal exec now at Google, of recruiting Bedier, thereby breaking a contractual agreement with eBay. It also claims Bedier attempted to recruit former colleagues still at PayPal and that put all the latest PayPal information on a personal computer before leaving the company.
PayPal, a unit of eBay, worked closely with Google for three years until this year on developing a commercial deal where PayPal would serve as a payment option for mobile application purchases on Google's Android phones, according to the suit. Bedier was the senior PayPal executive leading and finalizing negotiations with Google on Android during this period.
The suit also claims Bedier transferred up-to-date versions of documents outlining PayPal's mobile payment strategies to his non-PayPal computer just days before leaving PayPal for Google.
“By hiring Bedier, with his trade secret knowledge of PayPal's plans and understanding of Google's weaknesses as viewed by the industry leader (PayPal), Google bought the most comprehensive and sophisticated critique of its own problems available," the suit says.
