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Wednesday, June 1, 2011

Paypal Sues Google Straight After Google Wallet Launch

Posted by @ 3:32 am

Shortly after Google announced the launch of their contactless payment feature ‘Google Wallet’ they were faced by a major lawsuit by the online payment giant PayPal.

Paypal alleged that two of their ex-employees (now senior executives at Google) had violated their contractual obligations to their former employer by giving out some highly confidential PayPal information to Google and other companies.

The eBay-owned company has filed its lawsuit based on two facts; first being a three year deal with Google that would see PayPal become a potential payment option for the Android Market and second being that two important PayPal/eBay employees joining Google within 4 months of the negotiations ending.

The lawsuit claims that the payment company had been engaged in a dialogue with Google over becoming a payment alternative for the Android Market transactions over the period 2008-2011.

PayPal claims that Google’s knowledge regarding this subject was limited which prompted them to share a significant amount of information, on how mobile payments worked, with the search giant, but only as a part of the negotiations. These talks were that time being led by PayPal’s that time employee Osama Bedier, who was assigned to Mobile, Platform, and New Ventures. After which a series of incidents until recently led the payment company to make such a big accusation.

PayPal accused their ex-employee Bedier of interviewing for a position at Google while the negotiations for the Android Market payment option were still on, implying a clear violation of employees contract. Bedier resigned from his post at PayPal on 24th Jan 2011 only to go work as the head of mobile payments at Google indicating that he had an important part to play in the development of Google Wallet.

PayPal confirmed that Bedier had access to some highly confidential data of the company’s “capabilities, strategies, plans, and market intelligence” in the mobile sector which they now see to have been applied to Google Wallet therefore implying a direct theft of trade secrets. Not only this, PayPal has also accused Bedier of using PayPal’s sales and marketing strategies while conducting a comparison with Google’s products as well as coaxing some other PayPal employees to switch over to Google.

Bedier’s partner in crime is an ex-employee of e-bay, Stephanie Tilenius who too is working for Google now. Stephanie has been accused of soliciting and recruiting Bedier at Google which again is a direct violation of her contractual obligations to eBay.

PayPal has some concrete evidence against Bedier that Google might have a tough time defending. Firstly a strategically timed employment of an ex-PayPal executive (through a former e-bay employee) who happens to be leading the negotiations on mobile payments with Google and then four months later Google launches its own mobile payment system, some thing that was till now under discussions with another company.

But the most prominent piece of evidence that PayPal has produced is that Bedier transferred some confidential data regarding PayPal’s payment and marketing strategies to a non-PayPal computer just a few days before leaving the company.

As compensation PayPal has demanded monetary reimbursement of damages, both from Bedier and Google as well as an injunction over the use of its trade secrets by the search company in the future.

Rene LeMerle Rene is the marketing manager of - a global search engine marketing company. He also leads the marketing for - a web 2.0 style community for online and digital marketers. Rene has been in the industry since 1997 with much of that time spent helping businesses embrace the best of the internet and digital world.

View Rene LeMerle's profile

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