PayPal is suing Google for stealing trade secrets that may have allowed it to start its smartphone payment business.
The heavyweight in online payment processing is also suing two former executives, Osama Bedier and Stephanie Tilenius for breach of contract, and Google for interfering with its contractual relations with employees.
Bedier headed up the company's mobile platform business and new ventures. His job was to bring PayPal's point of sale and mobile technology to retailers. He is now doing the same job for Google, which he joined in January.
PayPal says Bedier, using his knowledge of PayPal's business, gave away trade secrets to Google. It also says Telenius essentially poached its executive and that Goggle encouraged Bedier to reveal confidential information.
Telenius joined Google in 2009. She was barred by her contract with PayPal from soliciting other employees to work at Google, but the suit says she did that to get Bedier to defect to the search giant. Bedier, PayPal says, has also been soliciting employees to join Google.
Another piece of the suit is Bedier's role in negotiating with Google just before he left, and the conflict of interest that represents. PayPal was negotiating to serve as the payment conduit for Google's App Market. Bedier was the senior negotiator on PayPal's side, but he was interviewing for a job at Google without telling anyone at PayPal.
The suit doesn't just say Bedier brought the knowledge in his head. It also accuses him of taking sensitive documents dealing with PayPal's research about Google's position in the mobile payment market, as well as PayPal's own development of new features. He then showed them to non-PayPal employees. On top of that PayPal says it asked for the documents back, but Bedier has rebuffed his former bosses.
Both Bedier and Tilenius signed non-disclosure agreements and agreed not to solicit PayPal employees, at least until March 2, 2011. The suit says she broke that agreement by contacting Bedier before then.
The suit does not say exactly which trade secrets might have been used to build the Google Wallet service. But it does say Google knew about and encouraged Bedier to take confidential information from his old employer.
PayPal is asking for an injunction and damages, though it hasn't specified how much.
Google did not respond to a request for comment.