“Google this!,” says PayPal

While everyone else gets their information by googling it, how does Google get its information? Well, according to Pay Pal, it steals it.

Just two days ago (Friday, May 27, 2011 – for those reading this some other time), Google (in conjunction with MasterCard, Citigroup, Sprint, and First Data) announced a new service by which people can use their mobile phones as credit cards.  See Reuters here.

Later that same day, PayPal reportedly sued Google (and two former PayPal employees, Osama Bedier and Stephanie Tilenius) in Califorina, alleging (among other things – as is customary) that Google acquired PayPal’s trade secrets relating to its mobile phone payment service, and that Google did this by hiring these two individuals. See LA Times here. The case (complaint here) also accuses one of the employees of breaching an anti-piracy agreement.

The case – if it goes anywhere – raises some interesting issues at the intersection of employee mobility and right to work on the one hand and the right to protect trade secrets on the other hand. In particular, while in many states, this would be a relatively straight-forward case for PayPal, in California, which has a strong public policy favoring employee mobility and the right to work, it will be a rare test of how the California courts balance these two important policies – especially following the California Supreme Court’s 2008 seminal case on restrictive covenants such as the anti-piracy agreement involved here (Edwards v. Arthur Andersen).

Stay tuned!