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PayPal sues Google, two former execs for stealing trade secrets

Recently, Google announced an exciting new product that will allow customers to pay for items digitally, by simply tapping their phone to a payment counter. The same day Google announced its new product, PayPal decided to file a suit against the internet giant and two of its former executives who had apparently been involved in developing the technology. That technology has been estimated as having a $1 trillion opportunity market.

One of the former PayPal employees had spent the last couple years of his time at the company leading negotiations with PayPal in attempt to team with Google on the mobile payment system. That deal ultimately fell through, though, and that employee left PayPal and joined Google to assist in leading efforts to get the product developed.

The other employee had apparently been in charge of various EBay sections until 2009, when she moved to Google. She now acts as Google's vice president of commerce. According to sources, she alerted the other employee to a large a "HUGE opportunity" via Facebook while he was still at PayPal.

PayPal's lawsuit alleges that Google stole trade secrets related to mobile payment systems and poached employees. The two executives are accused of violating contractual agreements

Google defends itself against the accusations, saying that under California law, workers have the right to take their knowledge and expertise to better employment opportunities.

The case is interesting, because it highlights the tension between laws protecting the right to work-sometimes by invalidating non-compete clauses-and laws protecting trade secrets. Even though the former executive accused of stealing trade secrets was not under any non-compete agreement and was free to work for another company, how could he totally rid himself of all knowledge of trade secrets in his new position?

Source: Los Angeles Times, "PayPal sues Google, accusing it of swiping trade secrets, poaching employees," 27 May 2011.

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