Friday, June 3, 2011

Google being sued for misappropriation of trade secrets and unfair competition after sharking PayPal (EBay) employees

In a complaint filed on May 26th with the Superior Court of California (County of Santa Clara), PayPal brought suit against Google for trade mark misappropriation and unfair competition with reference to their mobile payment systems.  

Image by Idea Go
PayPal is also suing their former VP of Platform, Mobil and New ventures Osama Bedier, and former PayPal Senior VP of North America and Global Production Stephanie Tilenius (both currently with Google) as well as 50 unnamed “John Does” whom PayPal believe to be involved in one way or another with the fraudulent actions that allegedly transpired. 

Though it remains unknown to many, Google actually has its own online payment service- Google Checkout.  Created in 2006, Google Checkout was created as a tool to compete directly with the already popular PayPal service.  

Unfortunately for them it didn’t seem to take off.  The service was not even an item on Google’s 2010 Annual Report (compared with PayPal’s posted earnings of $3.4 billion in the same year).  As a result,
With Google’s Android taking up 30% of the smartphone retail market and the recently evidenced failure of their Checkout service, the company chose to commence negotiations with PayPal to have them engineer and produce the mobile payment solutions for the Android line.

According to the complaint, on October 26th 2010, PayPal and Google had a deal inked and ready to sign- except it never was.  Osama Bedier, through the influence of former PayPal employee (already working for Google) Stephanie Tilenius, left PayPal- while representing the company at the negotiation table- to take a similar position at Google.  Along with him he took all of his knowledge of PayPal’s trade secrets as well as physical information he allegedly e-mailed to a non PayPal e-mail account. 

PayPal also alleges that prior to Bedier’s departure, he was briefed on an analysis undertaken by PayPal of the weaknesses in Google’s system.  As if that weren’t enough, Bedier is also accused of actively recruiting other Google employees after his departure.  He even e-mailed Tilenius before his departure inquiring into the possibility of some PayPal people joining him on “day one” at Google. 

Google has yet to file a defense though they did release a statement saying that:

"Silicon Valley was built on the ability of individuals to use their knowledge and expertise to seek better employment opportunities, an idea recognized by both California law and public policy. We respect trade secrets, and will defend ourselves against these claims."
  PayPal is seeking injunctive relief in order to prevent the further misappropriation of their trade secrets as well as compensatory and punitive damages from Google, Bedier, Tilenius and the “doe’s”. 

Seems the Google strategy of “If you can’t beat them buy them” will have to cede way to PayPal’s “Sue them all (even if we don’t know their names) and let the courts sort them out”.  People seem to have a funny way of doing business in Silicon Valley.

No comments:

Post a Comment