PayPal says it will sue Google for breaching the use of the payments company's trade secrets, following the launch of a competing Google initiative to develop mobile point-of-purchase applications.
PayPal has launched a lawsuit against Google, claiming it brought one of their senior executives, Osama Bedier, over to the company to steal the work he had been doing for the past ten years on expanding online payment options to mobile applications.
PayPal dominates the industry
PayPal has dominated the online payment industry and built a US$3.4 billion industry from 2006 until 2010. The company works with 57 financial networks and over 15,000 banks worldwide.
In the same timeframe, Google came out with their version of PayPal called Google Checkout. Unlike PayPal’s extreme success, Google Checkout is virtually unknown outside the Google world.
From 2008 until April of 2011, PayPal claims to have provided education on mobile payments to Google and its employees.
During the consolidated project, Bedier had been interviewing job positions at Google while still holding his position at PayPal, where he was the executive of negotiations for the project. PayPal claims to have been unaware of the interviews that were being conducted at that time.
According to lawsuit documents, Bedier was offered a job on 31 October 2010. Bedier made no immediate reactions to the job offer but instead met with Andy Rubin, Google’s executive in charge of negotiations for the project, to discuss how he could help Google compete with PayPal if he were to accept the position.
In December of 2010, Bedier admitted to having interviewed for a position at Google, but he promised PayPal he was committed to staying. PayPal warned Bedier that if he took the job at Google, “he would misappropriate PayPal’s trade secrets” and there would be a “manifest conflict of interest” if he were to join their mobile department, according to lawsuit documents.
A turn of events
After the turn of the new year, Google announced Larry Page would take the position as CEO from Eric Schmidt, beginning 4 April 2011. Four days after this announcement, Bedier left PayPal for Google.
In late February, a finalised agreement for the partnership between Google and PayPal on the digital wallet project was signed by the CEO at the time, Eric Schmidt. Once Larry Page took over as CEO on 4 April, Google decided they were going to break free from PayPal to start their own version of the project as a competitor.
Continued over page...