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PayPal lawsuit alleges Google stole trade secrets

PayPal claims the Web giant misappropriated trade secrets by hiring away a key executive in PayPal's mobile payments effort.

PayPal filed a lawsuit against Google today, alleging the Web giant misappropriated trade secrets from its mobile-payment business when it hired away a key executive in PayPal's mobile payments effort.

Osama Bedier

The lawsuit (PDF), which was filed in Santa Clara County Superior Court in California, alleges that Osama Bedier, a former senior PayPal executive working on the company's mobile-payments platform, misappropriated PayPal's trade secrets when he went to work for Google earlier this year.

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."

PayPal also notes that from 2008 to 2011, Bedier was helping PayPal negotiate a commercial deal where PayPal would serve as a payment option for mobile app purchases on Google's Android Market. "At the very point when the companies were negotiating and finalizing the Android-PayPal deal, Bedier was interviewing for a job at Google without informing PayPal of this conflicting position," the lawsuit claims.

The lawsuit also alleges Google VP of Electronic Commerce Stephanie Tilenius, another former PayPal executive, violated contractual obligations by recruiting Bedier, with whom she had worked for several years.

The lawsuit, which also lists 50 other unidentified individuals as defendants, seeks unspecified compensatory and punitive damages, as well as restitution and royalty.

PayPal said it resorted to the lawsuit to protect its assets.

"We treat PayPal's 'secrets' seriously, and take it personally when someone else doesn't," Amanda Pires, senior director of PayPal global communications, said in a statement. "So we made a decision today. We filed a lawsuit against Google and two former colleagues who now work there, Osama Bedier and Stephanie Tilenius."

The 28-page lawsuit was filed on the same day that Google unveiled Google Wallet and Google Offers, services that will combine coupons and discounts and payments at the time people buy things through their phone.

Tilenius played a key role in Google's announcement, saying the company plans to bring all parts of the retail experience together to make "tomorrow's best shopping experience."

Google representatives did not immediately respond to a request for comment.

Update at 12:03 p.m. PT Friday: In response to the lawsuit, Google e-mailed the following statement: "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."