PayPal sues Google over electronic wallet

PayPal alleges that search giant hired two of its former executives to obtain trade secrets for mobile transactions project

Google's first payments from its new "electronic wallet" system may be to the online transaction company PayPal, which claims that the company and two of its executives stole trade secrets for the project.

Unveiled on Thursday, the Google Wallet project uses a technology called Near Field Communications (NFC) to allow contactless transactions between consumers' phones and merchants' terminals.

But PayPal has filed suit in California following the launch in New York, alleging that Google lured away PayPal executive Osama Bedier earlier this year to obtain trade secrets that are now being used in Google's service. The suit also names Stephanie Tilenius.

Both Bedier, now Google's vice president of payments, and Tilenius were among those showing off the technology in New York.

The wallet app itself will require a PIN, as will each transaction. The payment credentials will be encrypted and stored on a chip, called the secure element, inside the phone. The app itself will be free to users.

Google emphasised that the wallet service would be open to all businesses and invited other banks, credit card issuers, payment networks, mobile carriers and merchants to work with it. If the phone was stolen, the credit cards inside could be remotely disabled. Consumers would have the same "zero liability" for unauthorised transactions made with their phone as they would with their plastic cards.

The suit also alleges Bedier was interviewing for a job at Google while he was also negotiating for PayPal to handle sales in Google's application market for phones running on its Android software.

The suit said Bedier worked for nine years at PayPal, most recently serving as vice president of platform, mobile and new ventu! res. He joined Google on 24 January 2011. Tilenius was at eBay from 2001 to October 2009, and served as a consultant to the company until March 2010.

The suit says Tilenius joined Google in February 2010 as vice president of e-commerce. Bedier is accused in the suit of having "misappropriated PayPal trade secrets by disclosing them within Google and to major retailers".

The suit accuses Tilenius of recruiting Bedier, thereby breaking a contractual agreement with eBay. It also claims Bedier attempted to recruit former colleagues still at PayPal.

The suit claims that PayPal and Google had worked closely together for three years until this year on developing a commercial deal where PayPal would serve as a payment option for mobile app purchases on Google's Android phones.

It said Bedier was the senior PayPal executive leading negotiations with Google on Android during this period.

"At the very point when the companies were negotiating and finalising the Android-PayPal deal, Bedier was interviewing for a job at Google without informing PayPal of this conflicting position," the suit claims.

The suit was filed at Superior Court of the State of California. Google had no comment, saying it had not seen a copy of the lawsuit.


guardian.co.uk Guardian News & Media Limited 2011 | Use of this content is subject to our Terms & Conditions | More Feeds


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