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eBay, PayPal Sue Google Over Mobile Payment Trade Secrets

By Robin Enos on May 31, 2011 6:47 AM

In a clash of titans, eBay and PayPal have sued to stop Google implementing a mobile payments system for its Android phone. The system would allow consumers to make bank and merchant payments through mobile phones.

The EBay/PayPal lawsuit, filed in California state court this week against Google, highlights an ongoing turf war over a $1 trillion opportunity in mobile payments. Combatants range widely from traditional financial and credit card companies, to tech-sector companies, reports Reuters.

The latest battleground centers on the contents of the heads of two executives.

Stephanie Tilenius worked at eBay for eight years, before joining Google in February 2010 as vice president of e-commerce.

And Osama Bedier worked at PayPal for nine years, most recently as vice president of platform, mobile and new ventures, until joining Google in January 2011.

Google's complaint accuses Tilenius of recruiting Bedier. Then, Google claims, Bedier "misappropriated PayPal trade secrets by disclosing them within Google and to major retailers," reports Reuters.

EBay and PayPal claim Bedier led Ebay's negotiations with Google for three years, before Google hired Bedier.

The eBay/PayPay complaint seeks relief under California's enactment of the Uniform Trade Secrets Act, Civil Code secs. 3426-3426.11. The complaint seeks both monetary damages, and preliminary and permanent injunctions stopping Google from exploiting Bedier's knowledge.

The complaint also alleges Tilenius breached an express trade secrets provision of her agreement with PayPal, and alleges other causes of action under California's fiduciary duty and unfair business practices laws.

But there's always another way to look at it. California Business & Professions Code 16600 outlaws agreements limiting employees from competing against their old employers. Generally, non-competition agreements are unenforceable in California--despite the fact that such provisions in written employer/employee contracts are quite common.

So the PayPal/eBay lawsuit against Google illustrates rights in conflict. The employee cannot be limited from competing with an old employer. But the employer can protect trade secrets. And a court can enjoin the employee from using what he or she knows to produce cool new products for a new employer.

California law allows the body to quit and go work across the street. But the struggle between PayPal/eBay and Google over the contents of Mr. Bedier's brain pertaining to mobile payment trade secrets will have to play out in court.

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