PayPal and eBay accuse Google of stealing trade secrets for electronic wallet

Google is sued over mobile phone 'wallet'

Google is facing a lawsuit from PayPal and eBay who claim it stole trade secrets for its new mobile phone 'Wallet'.

Internet search giant Google unveiled its free mobile application this week, Google Wallet, which turns a smartphone into an electronic wallet, allowing shoppers to pay for goods using contactless transactions.

However PayPal and eBay lodged a lawsuit hours later claiming that Google hired former PayPal executives Osama Bediers and Stephanie Tilenius earlier this year to steal trade secrets for the wallet.

They allege that Google and Bedier misappropriated PayPal trade secrets by sharing them within Google, while Tilenius, now Google vice president of electronic commerce, violated her contract by hiring Bedier.

Ebay said PayPal and Google worked closely together for three years until this year on developing a commercial deal where PayPal would serve as a payment option for mobile application purchases on Google's Android phones.

It said Bedier was the senior PayPal executive leading and finalizing negotiations with Google on Android during this period.

It also claimed Bedier transferred up-to-date versions of documents outlining PayPal's mobile payment strategies to his non-PayPal computer just days before leaving PayPal for Google.

"By hiring Bedier, with his trade secret knowledge of PayPal's plans and understanding of Google's weaknesses as viewed by the industry leader (PayPal), Google bought the most comprehensive and sophisticated critique of its own problems available," the suit said.

Google spokesman Aaron Zamost said the company had not yet received a copy of the complaint would not be able to comment until it has had a chance to review it.

Google and PayPal have done battle in the recent past in online payments via computers with the launch of Google Checkout in 2006, but Checkout has had a minimal impact on PayPal's market dominance.

Designed to work as an app on Android phones, the Google Wallet uses MasterCard's "PayPass" technology, which lets shoppers tap cards for payment.

Google has signed up retailers including Macy's Inc, American Eagle Outfitters Inc and Subway to blend the service with loyalty programs and discount offers.

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