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Google accused of stealing PayPal's mobile payment secrets

Exec defected for Google 'while brokering Android pact for PayPal'

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PayPal has sued Google and two Google executives who defected from PayPal to help the search giant's push into mobile payments. The suit was filed in California on Thursday, the same day Google unveiled its mobile payments system in New York.

The suit (PDF) alleges that Google and Osama Bedier – the PayPal mobile payments exec who departed the company for Google in late January – misappropriated PayPal trade secrets by sharing them within Google and with "major" retailers. It then claims that Stephanie Tilenius, the Google vice president of electronic commerce who also came from PayPal, violated her contractual obligations by bringing Bedier to Google.

According to the suit, Bedier spent three years – from 2008 to his departure from PayPal in January 2011 – negotiating with Google to install PayPal as an option for mobile payments on Android phones. "PayPal provided Google with an extensive education in mobile payments," the suit reads. "Bedier was the senior PayPal executive accountable for leading negotiations with Google on Android during this period. 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.

"Bedier's conduct during this time amounted to a breach of his responsibilities as a PayPal executive."

The suit also claims that before and since his arrival at Google, Bedier had violated his obligations at PayPal – an eBay subsidiary – by soliciting and recruiting other PayPal employees to make the move to Google.

The suit seeks compensatory, punitive, and other damages as well as royalties for the misappropriation of trade secrets. In addition to Google, Bedier, and Tilenius, it lists 50 other unnamed defendants.

At the very least, the suit shows how important both companies see the mobile payments business, and it highlights Google's efforts to use Android as means of delivering its own services. Android is billed as an open-source platform anyone can use, but Google maintains tight control over official Android devices.

In the fall, Google was sued by Skyhook Wireless – the Boston-based outfit that pioneered the art of pinpointing a mobile device's location based on Wi-Fi and cell-tower signals – which accused using Android to strong-arm handset makers into choosing Google's location technology rather than Skyhook's. With its suit, Skyhook claims that Google's head Android man, Andy Rubin, told Motorola co-CEO Sanjay Jha that if Motorola didn't drop Skyhook from its Android phones, Google would remove official Android support. Without official support, Motorola could not use the Android trademark or proprietary services such as the Android Market or Google Maps.

The latest version of Android is always developed behind closed doors and only open-sourced when the first handsets reach the market. Android Honeycomb, designed for tablets, debuted on devices in January, but it has yet to be open-sourced, and Google says it will not be open-sourced before the end of the year. ®

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