PayPal sues Google + ex-PayPal VP for Google Wallet

https://www.thepaypalblog.com/2011/05/paypal-files-lawsuit-to-protect-trade-secrets-a-reason-worth-fighting-for

by zengr • 15 years ago

166 71 15 years ago

thepaypalblog.com

derwiki• 15 years ago

That article was entirely unhelpful. What are Osama and Stephanie's backgrounds, and why do they deserve to be sued?

olivercameron4• 15 years ago

Read the lawsuit, it says everything you need to know: http://www.ebayinc.com/assets/pdf/fact_sheet/2011_PayPal_DOC...

olivercameron4• 15 years ago

After reading briefly through the lawsuit[1], it seems that Osama Bedier was working as a senior manager at PayPal creating a product similar to Google Wallet (referred to as a "mobile payment" point of sale). He then interviewed and left for Google (whilst PayPal and Google were in negotiations for a separate business deal), and PayPal claims that he used trade secrets from PayPal to help Google create Wallet.

Stephanie Tilenius broke her contractual agreement with eBay after she recruited Bedier (and attempted to recruit many other PayPal employees).

"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 job at Google without informing PayPal of this conflicting position. Bedier’s conduct during this time amounted to breach of his responsibilities as PayPal executive."

I'm not a lawyer, but it looks like they have pretty good reason to be upset.

1. http://www.ebayinc.com/assets/pdf/fact_sheet/2011_PayPal_DOC...

abraham2• 15 years ago

> ... [Bedier] not only used trade secrets from PayPal to help Google create Wallet, but also poached Stephanie Tilenius ...

You have that switched.

> Google hired Bedier after another former eBay executive, defendant Stephanie Tilenius, solicited and recruited him.

olivercameron4• 15 years ago

Thanks, updated.

yanw• 15 years ago

They can be 'upset' all they want it doesn't necessarily mean the case won't be thrown out, remember this is merely paypal's side of things.

erikpukinskis• 15 years ago

I'm sure this makes it at least a little harder to hire talent. I wonder how much. I know I'd never work for a company that thought it owned me, and was entitled to control who I could recruit to work with me after I left. I wonder how many other people feel the same way.

olivercameron4• 15 years ago

It's not that PayPal want to control their employees after they move on, it's that they want to maintain their trade secrets and make sure the employees actually stick to what they agreed to in their contracts.

redwood• 15 years ago

This is silicon valley, the wild west. Everyone knows the direction technology will take, it's execution that's so tough. I see Google paying a settlement on this one just like they did with adwords http://news.cnet.com/Google,-Yahoo-bury-the-legal-hatchet/21...

bmj• 15 years ago

Reading the complaint, it's not just that a PayPal employee went to work at Google. According to the complaint, Bedier (one of the defendants) was negotiating a payment deal between Google and PayPal while interviewing with Google. And soon after Bedier left, Google apparently scuttled the entire deal. And there's the matter of Bedier putting PayPal strategy documents on his personal machine days before leaving PayPal for Google.

Of course, we're only hearing one side of the story at this point, but at least from PayPal's perspective, this isn't just about losing a couple of executives to Google.

zs11• 15 years ago

Osama Bedier was a big deal at PayPal. He ran the whole mobile and point-of-sale organization. Everyone know who he was, and everyone was shocked when he left for Google.

This could get ugly.

FeelsGoodMan69• 15 years ago

Hopefully, this means Paypal sees Google as a legitimate threat. Good. The world could only improve if Paypal ceased to exist.

zengr• 15 years ago

And why is that?

ianl• 15 years ago

Paypal, at least in my experience gouges its customers at every turn. For instance, the exchange rates they used are generally highly outdated.

However, I have not used Paypal in several years so they might have fixed that.

suking• 15 years ago

Because he doesn't understand how hard it is to easily allow payments when so much fraud is out there - especially once you go int'l. He's just naive.

mishmash• 15 years ago

Paypal has a long documented history of freezing accounts for ambiguous reasons, often with little or no recourse for the account holders.

One quick/recent example: http://www.theindiestone.com/community/viewtopic.php?f=20...

proexploit3• 15 years ago

People get upset about the way Paypal deals with fraud because they lose a lot of money to it and take extra precautions. While that is reasonable, they do a lot of things other people (and I) find to be ineffective and hurtful to users. For example, Paypal escapes banking regulation in the US due to loopholes. If you have your account locked for any reason they will hold your money for 6 months without interest. No exceptions. Their customer service sucks, it's nearly impossible to get ahold of a human and they'll require documentation they have no legal right to in order to unlock your account (example: complete bank statements: http://openca.mp/blog/paypal-hates-conferences-especially-op...). I believe the world without Paypal would certainly be a better place. I emphasize with their difficult issue of preventing fraud but that doesn't make their actions ok.

Edit: In response to following comments, I amended above where it made it sound like Paypal escaped a banking regulation to withhold your money. My issue is that they use the 180 hold on account that haven't been locked for good reason.

Some people may be able to get customer service. They offer different kinds of accounts and maybe with a merchant account through Paypal or a business account. I've personally found Paypal to be lacking when trying to get in touch with them. I had someone attempt to scam me out of money by doing a chargeback for an eBay product I shipped via USPS (no tracking number). When they opened a hold on the account because the person said they didn't receive the item, Paypal had a field where I could put the tracking number. Having no tracking number, I tried to attach a note saying I shipped via USPS. I tried contacting support and no one ever answered. I offered to sign something making my personally liable if there was a lawsuit (as I had shipped the item). After all of that, their response was to refund the money so I was out the product and money, and close my account.

Don't act like I'm the only person who's got problems with Paypal. If you have had only great experiences with them, more power to you, but there's many more people who have been wrong by Paypal than other money processors:

"paypal sucks" About 65,800 results

"visa sucks" About 3,970 results

"mastercard sucks" About 1,760 results

If they had a true competitor, they'd be struggling to stay in business.

itg• 15 years ago

You have to look at the lawsuit separately from whatever feelings you have towards either company. I'm not a huge fan of Paypal but it seems as if they have a good case against Google. I wouldn't want a employee giving trade secrets to a competitor, especially if that competitor was Google.

jrockway• 15 years ago

But here's the thing: where are the trade secrets? Displaying a picture of a credit card on a phone's screen while you send that card's info to the NFC card reader is not exactly hard to come up with on your own.

lurker192• 15 years ago

How would the world be be better if Google steals and deploys the evil from Paypal, which is exactly what is at issue here?

tnorthcutt• 15 years ago

the evil

What, exactly, does that refer to?

android2• 15 years ago

PayPal, that exhalted bastion of ethical business practices, will be very successful in this appeal to public sentiment.

brown9-24• 15 years ago

Even jerks are sometimes right, or in this case, have legal standing.

lurker192• 15 years ago

However, it helps to pay one's own debt to society before calling in someone else's.

I personally had to file a fraud dispute with my credit card company after receiving two promises over two months to reverse an unauthorized charge PayPal put on my card at their own (not a third-party vendor's) behest.

dangrossman5• 15 years ago

I've yet to read a story where PayPal did something unethical, despite the monthly PayPal stories on HN. All of them have involved practices (freezing accounts, almost always with very clear cause, holding funds for 180 days, etc.) that are well within their terms of service AND identical to the policies of every merchant account provider in the US.

Sephr• 15 years ago

Just because it's in their ToS doesn't make it ethical, only legal.

ryanbigg• 15 years ago

What struck me the most in that lawsuit (which I haven't yet finished reading, but seems pretty compelling) is:

"Bedier transferred up-to-date versions of documents outlining PayPal's mobile payment and point of sale strategies to his non-PayPal computer just days before leaving PayPal for Google"

and

"At the time he left PayPal, Bedier admitted that he had confidential eBay information in locations such as his non PayPal computers, non-PayPal e-mail account, and an account on the remote computing service called 'Dropbox'"

It goes on to explain that PayPal has requested that Bedier removes the information from his personal accounts and returns it to PayPal. Bedier has not yet done that.

This almost displays intent to share this information with outside sources. Wow. This sounds like a massive shitstorm is brewing.

andrewcooke• 15 years ago

What's with the "Does" in the lawsuit? They are mentioned on the front page, but not anywhere else.

I realise "Doe" is "John Doe" - a pseudonym for an unknown person. But I can't see why they are included in the suit (all 50 of them).

brown9-24• 15 years ago

Because PayPal is seeking to also sue people whose names they do not yet know:

6. eBay and PayPal (collectively “Plaintiffs”) are ignorant of the true names and capacities, whether individual, corporate or otherwise, of defendants named herein as Does 1 through 50 and Plaintiffs sue said defendants by their fictitious names. Plaintiffs will seek leave to amend this complaint to assert allegations against the Doe defendants when their true involvement in these matters and capacities are ascertained.

In other words, PayPal employees that PayPal alleges that the former employees recruited to Google.

phirephly• 15 years ago

As I understand it, this is very standard lawsuit boiler plate, such that if they later realize there is another party involved, they can just tell the court, "so-and-so is Doe 1," allowing them to very rapidly fold in new parties without refiling the suit.

aclark• 15 years ago

Why is everyone a Delaware corporation? That makes me feel like my company should be a Delaware corporation. ;-)

mikeklaas• 15 years ago

Why corporations choose Delaware [PDF]:

http://corp.delaware.gov/whycorporations_web.pdf

r00fus• 15 years ago

Corporations choose Delaware because the lawyers who incorporate them (usually contracted from big firms) choose Delaware.

brown9-24• 15 years ago

See http://en.wikipedia.org/wiki/Corporate_haven#North_America and http://en.wikipedia.org/wiki/Delaware_General_Corporation_La...

chintanp• 15 years ago

Check these detailed answers on Quora, http://www.quora.com/Why-do-a-lot-of-public-companies-incorp...

unfasten• 15 years ago

If you're really thinking about incorporating in Delaware then you might want to check out this post, "Why incorporating my startup was my worst mistake" http://news.ycombinator.com/item?id=2399139

It's about the experience another HN user had incorporating his startup in Delaware and also generated a nice discussion about things to think about before you decide to incorporate (and specifically in Delaware).

DevX101• 15 years ago

Reading the suit, a lot of the evidence that Tilenius recruited Bedier was based on the content of Facebook messages and text messages. Anyone know how they got access to these supposedly private communication?

Case in point: "Tilenius reached out to Bedier by text message and again attempted to change his mind. On or about December 3, 2010, Tilenius messaged Bedier, “I still feel like I am missing something, for example what if we increased your offer, would that change things?"

guelo2• 15 years ago

If these communications occurred from within Paypal's coporate network or using Paypal equipment they could have been gathered using employee spying systems that they might have in place.

esrauch• 15 years ago

Paypal has company phones that log all your text messages?

qasar• 15 years ago

Talent moving from company to company is not new in SV. And to be more specific, if you've been working you're whole career in maps technology and then move to maps division in another company, that shouldn't be shocking. Also, I have a hard time believing this one guy was the entire lynch pin on wallet and was the difference between Google doing it or not. A payment wallet is not a new concept.

This is a clear sign of paypal's weakness. Rather than compete, sue. It's like zuckerberg said: If you guys were the inventors of Facebook, you'd have invented Facebook.

I'm not a lawyer, just an engineer so maybe i'm missing something but doesn't seem as dramatic as some of the comments here imply

brisance• 15 years ago

It's neither the career move nor the concept of the e-wallet that is in dispute... refer to the Mark Papermaster hiring fiasco that involved Apple and IBM a few years ago. The complaint is about a high-level executive acting against the company's interests while being employed in that capacity by stealing company information. I'm not a lawyer but I seem to recall quite a few similar cases e.g. someone from Coca-Cola who jumped shipped to Pepsico (or was it the other way around) and got charged with violating trade secrets laws.

Edit: OK I got the details of the Coca-Cola/Pepsico case wrong. Apparently some Coca-Cola employees tried to profit from selling trade secrets to Pepsico. Article here: http://www.allbusiness.com/crime-law-enforcement-corrections...

brown9-24• 15 years ago

I have a hard time believing this one guy was the entire lynch pin on wallet and was the difference between Google doing it or not

Perhaps not, but as the filing alleges, he was the person in charge of negotiating a deal with Google for Paypal to provide these Wallet-like services at the same exact time he was interviewing at Google for a job. That sounds like the definition of conflict of interest to me.

As an aside, I wonder what the interview process is like for someone Google is hoping to poach like this? Wonder if he had to interview with Andy Rubin a few days after/before appearing on the other side of the negotiating table from him?

jasonkester• 15 years ago

This seems like a good illustration of the principle: "Ideas are worthless. Execution is what matters."

Paypal had the idea first and a good 10 years worth of trying to make it work (payments from mobile devices was, after all, their first product, even pre-dating online payments). And in this case, they even had some of the same team working on the idea, but they just couldn't make it happen. Google could, and did, so they'll win.

I can understand why PayPal would be upset. But really this just strikes me as another reason why we shouldn't get too worked up about the value of ideas.

meow• 15 years ago

Sounds like Facebook vs Winklevoss reloaded..

tvon• 15 years ago

Devils advocate stance, Google couldn't make it happen until they hired the people from PayPal who had been working on it for ten years.

Sparragus• 15 years ago

How can this be trade secrets? Japan has been doing this for years! [1] This is not new technology.

1. http://en.wikipedia.org/wiki/Osaifu-Keitai

forkrulassail• 15 years ago

We've had M-Pesa in South Africa for ages.

Mobile was the next obvious step.

ignifero• 15 years ago

Makes one think that we are moving from a world of corporations to a world where only people matter, and everyone works as a contractor directly with a VC.

ck2• 15 years ago

I am not sure how but I hope Google beats the heck out of PayPal.

Remember Yahoo Wallet?

Tichy• 15 years ago

What could be secret about a mobile wallet? The technology involved can hardly be secret? The idea itself isn't original, either.

methodin• 15 years ago

This seems like a desperate move. I'm not aware of the timelines but it seems ridiculous that Paypal just sat around knowing their "secrets" were taken to Google and hoped the person(s) that took them would remove all traces and not divulge them to Google. Would make me believe that Paypal was incapable of actually delivering a quality product and Google seemed like a more viable candidate for actually getting the idea implemented. Lawsuits like these are increasingly only a mechanism for the lazy or inept to feel validated. I guess this is why we're told ideas are pretty much worthless.

PayPal sues Google + ex-PayPal VP for Google Wallet

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