Paypal, E-Bay sue Google for misusing trade secrets
Suit also targets two executives pirated by Google
World's leading online payment processor PayPal, Inc. and its owner, ebay Inc., operator of a marketplace hosting hundreds of millions of transactions per year, have sued Google Inc., operator of the world's most popular search engine, and two former executives in the U.S. Superior Court of the State of California for "misappropriation of trade secrets."
"Spending time in courtrooms is generally not our thing. We prefer to compete and innovate, serving our customers by offering the best way to pay and be paid. That's how you really win. But 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, PayPal global communications, said in a post.
Both PayPal and Google are currently offering their mobile payment and point of sale technologies to major retailers for trial use."Mobile payment" refers to the rapidly growing trend of consumer payments made using smartphones and other mobile devices, either in-store, online or peer-to-peer. According to PayPal, industry analysts project that the domestic mobile payment market will reach $200 billion to $1 trillion annually within the next few years.
PayPal said that it has spent the past 10 years building a global leadership position in online and mobile payments. Over the past year, PayPal has been developing capabilities to provide large retailers with next generation "mobile payment" point of sale technology and services. Recently, Google has also been exploring the market for next generation mobile payment point of sale technology and services.
In the lawsuit, PayPal claims that a former employee is now leading Google's efforts to bring point of sale technologies and services to retailers. According to the suit, Osama Bedier was a senior PayPal executive charged with bringing its mobile payment and point of sale technologies to retailers. Mr. Bedier has detailed knowledge of PayPal's point of sale, mobile payment and digital wallet business strategies, concepts and proposed procedures.
Mr. Bedier, who left PayPal for Google in January 2011, has allegedly misappropriated trade secrets by disclosing them within Google and major retailers. Mr. Bedier also allegedly violated his obligations to eBay by soliciting and recruiting PayPal employees to work at Google.
In 2008 to 2011, Google and PayPal were negotiating a commercial deal where PayPal would serve as a payment option for mobile app purchases on Google's Android Market. Mr. Bedier was the senior PayPal executive accountable for leading negotiations with Google. During the negotiations, Mr. Bedier was interviewing for a job at Google -- without information PayPal of this conflicting position.
The lawsuit also names former eBay senior vice president of North America Stephanie Tilenius, who left for Google in February 2010, among the defendants.
The lawsuit claims that Google launched in 2006 a PayPal-like payment processing system with the Google Checkout. However, According to PayPal, Google Checkout "is mostly a tool for acquiring customer information for the benefit of Google's other products and services," and has had virtually no impact outside of Google. Revenues from Google Checkout went unreported as not material in Google's 2010 Annual Report, compared to PayPal's $3.4 billion in the same timeframe.
According to PayPal, Google's growing dominance in mobile operating systems has led it to attempt entry into the mobile payment space. At over 30%, Google's Android currently enjoys the largest and fastest growing market share for the smartphone operating system market in the country, beating out Nokia's Symbian, Apple's iOS, Research in Motion's BlackBerry, and Microsoft's Windows Mobile.
PayPal and eBay are represented by attorneys at Orrick, Herreington & Sutcliffe LLP.