PayPal sued Google for Google Wallet

Shortly after Google introduced the Google Wallet mobile payment service, PayPal and its parent company, eBay, filed a lawsuit against Google and two former PayPal employees who are currently involved in mobile payments at Google, Osama Bedier and Stephanie Tylenius.

According to the lawsuit , Google has been negotiating with PayPal for launching payments on mobile devices for two years. But when the deal was supposed to be signed, Google instead hired Bedier, who was negotiating with PayPal. The lawsuit describes the sequence of events:

In 2010, Osama Bedier was responsible for PayPal negotiations. Andy Rubin answered for talks from Google. On October 26, 2010, PayPal and Google completed the negotiations and prepared an agreement for signing. By that time, without the knowledge of PayPal, Bedier completed a series of interviews with top executives of Google, culminating in the October 21 meeting between Bedier, Google Senior Vice President Jonathan Rosenberg and then Google President Larry Page.

October 31 Bedier was invited to work at Google. He agreed not immediately, but a few months later - in January 2011. All of this coincided with the entry of Larry Page in the position of CEO and a shift in Google’s strategy to create, rather than cooperate in mobile payments.
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The lawsuit states that Bedier knew all about PayPal’s plans for mobile payments, and was also aware of Google’s internal detailed analysis of weaknesses in this area. Moreover, he is accused of storing eBay confidential information in his personal computer, personal mail and in Dropbox.

The implication is that Bedier used his knowledge of PayPal’s strategy to create a Google mobile payment service strategy. He used this knowledge to make agreements with major retailers about using Google Wallet:

Bedier was also part of the Google team, meeting with large retailers. PayPal claims that during these sales, Bedier didn’t compare Google’s products and services with PayPal’s products and services in discussions with customers who are objects of interest to both PayPal and Google. In particular, Bedier’s comparisons included PayPal’s trade secrets, including an implementation schedule, expected features, an internal approach to mobile payments, PayPal points of sale, and wallet benefits in the cloud.

And finally, he actively attracted other PayPal employees, just as Tilenius helped attract him (which is why she was also named in the lawsuit). Most likely, the conflict will be resolved before the trial, but how much will hiring Bedier ultimately cost Google?