PayPal Sues Google over Mobile Payments

PayPal, the e-payments subsidiary of eBay, filed a 28-page lawsuit against Google this week for the alleged misappropriation of trade secrets, breach of contract, and a number of other accusations related to the improper use of PayPal’s confidential information.

Two former PayPal employees turned Google execs Stephanie Tilenius and Osama Bedier have been accused of sharing confidential information with Google despite a clear conflict of interest.  What sparked the whole controversy? The announcement of the Google Wallet, an initiative to make mobile payments via smart phone apps the next big thing.

‘Square‘ is PayPal’s version of the digital wallet, offering mobile payment solutions at the touch of a button no matter where you are.  Upon its release on Tuesday, PayPal headlines announced Square to be “the end of the cash register as we know it!”  While some may be skeptical about whether or not this is true, PayPal is taking no chances in letting Google move in on what they claim to be their intellectual property.

Defendant Stephanie Tilenius has been accused of asking Bedier repeatedly to join her at Google in 2009, thus violating her contract that explicitly forbids the solicitation of PayPal executives for at least a year.  Osama Bedier was PayPal’s VP of Platform, Mobile, and New Ventures for 8 years before becoming Google’s VP of Payments in January 2010. He has been accused of actively poaching PayPal executives and leaking trade secrets to Google.

The complaint reads: “PayPal has spent the past ten years building a global leadership position in online and mobile payments.  As a result, PayPal has substantial intellectual property in these fields.”

In this case, the odds are against PayPal.  Large companies often sue former employees, but because of the unquantifiable nature of intellectual property, they are often unsuccessful.  Both PayPal and Google plan on investing a substantial stake in the lawsuit -after all, the mobile payments industry is estimated to be a $630 billion market by 2014.

Images by William Hook and Carlos Luna via Flickr