eBay and PayPal Suing Google Over Employees And Trade Secrets Is Just Sour Grapes

My initial reaction of the news that Google was being sued by eBay and PayPal was one of mild annoyance. In the lawsuit, two Google employees  are accused of having “misappropriated PayPal trade secrets by disclosing them within Google and to major retailers” and of one of the plaintiffs who was recruiting another employee, is accused of “breaking a contractual agreement with eBay.”

These are tough claims to prove, and I’ve rarely seen them work out. Having lived in Silicon Valley and having been an analyst for Gartner Group, I’ve seen these types of lawsuits pop up all the time. As food for thought, I recall one popular payment forum, BayPay, where everyone who is, was, or wants to be involved in payments attends or has attended. At these mixers start-ups, big companies, retailers, and online merchants meet, network, share ideas, and even present product, strategy, or success stories. This is important, because you’ll see on the forum recent topics, and presenters discussing areas where Google and PayPal are fighting:

  • Strategies for Profitable NFC (Near Field Communication) Mobile Payment
  • Mobile Payment beyond NFC
  • Is Mobile ready for Payments? – Mobile Device Security Threats and Solutions

Beyond the general topics, the networking often includes a “I’m hiring” part of the agenda, as companies look for talent and expertise for implementation, development, general management, and yes, even strategy. You can guess that many people eventually meet future employers and/or partners at these events. It’s by design.

So is it possible that one of the plaintiffs wanted to jump ship from PayPal to Google without being actively recruited? Sure.

I did a quick LinkedIn search on PayPal to see how many ex-Googlers were at PayPal, possibly sharing trade secrets or knowledge. No less than 36 people came up, spanning areas such as region heads, relationship managers, developers, distribution management partners, engagement managers, recruiters, merchant account managers,  head of business development, etc. If you interviewed those candidates, might you figure out what Google was doing?

Is it possible that one or more people discussed strategies that Google could use for payments market penetration? Of course. I personally recall hearing Vivotech, one of the Google partners, discussing their contact-less payments solution back in 2005. In fact, you can see some coverage they received than in the Greensheet and other prominent payments magazines and trades on this page.

You might be surprised at how similar the strategies look from various payments companies, especially new entrants. They face many of the same problems and challenges: striving for adoption, overcoming market resistance, competing via partnerships, and driving toward ubiquity. Few companies can fully execute on the basic adoption strategies, as the payments business, and consumers, are conservative by nature.  Sometimes, basic strategic success is all that is needed to move toward larger and richer market growth strategies.

To put this in perspective, in nearly all cases, small or new players in the payments space seek partnerships, investment, and alliances with large retailers, Visa and/or MasterCard, and other payment processor. Those areas of strategy are more common sense than groundbreaking strides.

So while the hiring and strategic issues may not be a big deal, there is the concern for actual trade secret violations.  You may recall, the high profile trade-secret theft cases in the Electronic Design Automation (EDA) market, where copies of trade-secret files were found on personal computers and on the defendant’s computers. I was on the plaintiff’s side in another suit where source code from my company was found on the computers of the founders of a competing company (the founder had recently left my firm). Trade theft does occur.

So it may be sour grapes, it might be a legit claim, but hard to prove, it might also be true theft of secrets. In any case, it will only be drama and hearsay for me until a smoking gun is found and damages are shown, where the stolen secrets are really more than ideas on paper. I’ll let the analyst side of me withhold judgment and skip the drama until some real evidence and damage is shown.

About Duane Kuroda

Business ninja, deal hunter, Internet marketer, and technology fiddler obsessed about growing companies and launching products. Currently at Peerspin, Duane’s past lives include Vice President of Marketing roles at companies leading micropayments, Internet video, and online communities as well as research and consulting for mobile advertising. Duane has spoken at conferences including Digital Hollywood and Digital Video Expo on topics covering monetizing online content and online video, has appeared on TechNowTV and KNTV, and has been quoted in various magazines. Follow Duane on Twitter: @dkuroda.

2 Responses to eBay and PayPal Suing Google Over Employees And Trade Secrets Is Just Sour Grapes

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