Google Sued by PayPal Over Claims It Stole Trade Secrets

Google Inc. was sued by PayPal Inc., the fastest-growing unit at online marketplace EBay Inc. (EBAY), over claims it misappropriated trade secrets from PayPal’s mobile- payment business.

Osama Bedier, a former PayPal executive now at Google, stole PayPal’s confidential information, the company said in the lawsuit filed yesterday in state court in San Jose, California. Stephanie Tilenius, another ex-PayPal executive now at Google, violated contractual obligations by recruiting Bedier, PayPal said.

Bedier “is now leading Google’s efforts to bring point-of- sale technologies and services to retailers on its behalf,” according to the complaint. “Bedier and Google have misappropriated PayPal trade secrets by disclosing them within Google and to major retailers.”

Both companies are trying to move into storefronts from online transactions and build their mobile businesses. PayPal, based in San Jose, is working with major retailers to develop a new type of point-of-sale system -- the equipment next to cash registers where consumers swipe credit cards.

Google, based in Mountain View, California, yesterday unveiled two services to let consumers pay merchants and download coupons with a tap of their mobile phones.

“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,” Aaron Zamost, a Google spokesman, said in an e- mailed statement. “We respect trade secrets, and will defend ourselves against these claims.”

Android Talks

PayPal also alleges that Bedier, who left the company in January, discussed a job with Google while simultaneously leading negotiations to make PayPal a payment option on Google’s Android Market. He didn’t disclose the job-related talks, a breach of his fiduciary duty, the company said.

Tilenius, who left EBay in 2009, was under contract not to recruit employees, PayPal said. She messaged Bedier on Facebook Inc.’s social-networking website, telling him she had a “HUGE” opportunity for him, and sent him e-mails and text messages offering advice while he interviewed for a position, according to the complaint.

The case is PayPal v. Google Inc. (GOOG), 11CV201863, California Superior Court, County of Santa Clara (San Jose).

To contact the reporters on this story: Joseph Galante in San Francisco at jgalante3@bloomberg.net; Joel Rosenblatt in San Francisco at jrosenblatt@bloomberg.net

To contact the editors responsible for this story: Thomas Giles at tgiles5@bloomberg.net; Michael Hytha at mhytha@bloomberg.net

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