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Paypal v. Google: a tawdry tale of trade secret misappropriation



Google and its poached Paypal employees got sued for trade secret misappropriation yesterday, but we didn't know the dirty details until now. A peek at PayPal's complaint reveals there's a bit more to the story. Apparently, Paypal and Google were in talks last year to use PayPal for payments in the Android Market. Osama Bedier was in charge of those negotiations for PayPal in October of 2010, when the deal was supposed to close, but was allegedly interviewing for a mobile payment position at Google at the same time (holy conflict of interest, Batman!). The complaint claims that Bedier initially rebuffed El Goog's advances, told PayPal of the job offer and professed that he would stay, but jumped ship a month later (bringing some PayPal coworkers with him) after being recruited by Stephanie Tilenius and the almighty dollar. Once it hired Osama, Google reportedly put the brakes on the PayPal deal and created Google Wallet. Then Google, Bedier, and Tilenius got slapped with a lawsuit. A brief rundown of the legal claims awaits you after the break.

In California, information is a protected trade secret if it's economically valuable, isn't generally known, and its owner has made reasonable efforts to keep it secret. Additionally, contracts preventing employee poaching are enforceable in Cali to the extent that they're needed to protect trade secrets possessed by those employees. PayPal's plans and mobile payment strategies would certainly be valuable to its competitors, and it keeps its institutional info classified with employee confidentiality clauses and customer non-disclosure agreements. So, PayPal appears to have a pretty strong argument for trade secret protection, and its breach of contract claims against Bedier and Tilenius for soliciting PayPal employees are looking good too.

Of course, that assumes Osama, in fact, used (and is using) his knowledge of PayPal's mobile payment plans to create Google Wallet -- and that he breached his duty of loyalty when he got himself and others hired by El Goog instead of doing the Android deal. And, if the complaint is to be believed, Ms. Tilenius and Google are on the hook for inducing him to do these dastardly deeds. PayPal paints quite the picture of corporate intrigue, but it'll be interesting to see how the folks from Mountain View respond. The real question is, can Google Wallet pay legal fees?
TechCrunch
sourceComplaint [PDF]
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