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Did Google Execs Smuggle Secret Info from PayPal?

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Yesterday, Google was all smiles when it debuted its new mobile payment system, Google Wallet. The service will allow users of NFC-enabled smartphones -- and with a handy sticker, ones that aren't enabled -- to make fast and easy payments with just a swipe of the device near a supported kiosk.

Beating Apple, BlackBerry, and Microsoft to the punch, Google became the first smartphone company in the States to introduce a NFC-enabled payment plan. The company has teamed up with Citi, Mastercard, First Data, and Sprint to deliver what could be the beginning of a new marketing paradigm.

And PayPal ain't havin' it.

The eBay subsidiary is suing Google and two of its former executives -- Stephanie Tilenius and Osama Bedier -- for allegedly misappropriating trade secrets and breaching contracts after defecting to Google and helping design Google Wallet. Specifically, the suit claims Bedier stole confidential information and Tilenius violated contractual obligations when she recruited Bedier.

The suit reads that Bedier "is now leading Google's efforts to bring point of sale technologies and services to retailers on its behalf." Adding, "Bedier and Google have misappropriated PayPal trade secrets by disclosing them within Google and to major retailers."

GigaOM believes that while Tilenius is named in the suit, the main target is Bedier whose January 24 departure stoked the ire of eBay's CEO John Donahue and immediately triggered plans for a lawsuit. "PayPal believes that Bedier, who was leading up the company's mobile payment and point-of-sale offerings, had access to all its trade secrets -- information on technology, strategies, partnerships, etc. -- which could cause material damage to the company and its prospects," the site reported.

Since Bedier made the company switch, PayPal asserts that the exec smuggled crucial information in a Dropbox account and has refused to turn it over. The lawsuit reads:

"Despite Bedier's assurances and protests to the contrary, the point of his departure to Google has been to lead Google's efforts in mobile payments, particular mobile payment at the point of sale. Bedier is willfully usurping PayPal's trade secrets in these areas as well as well as its digital wallet in the cloud strategies for Google's and his own gain. Both Bedier's departure itself and Bedier's actions after his departure have damaged plaintiffs."

And perhaps the biggest poke in the eye: Google may have undercut PayPal's imminent announcement for a similar mobile payment service.

So much for some spirited competition.

(See also: Despite Apple's Delay, Google Forging Ahead with NFC and iPhone 5 Reportedly Won't Have NFC)

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POSITION:  No positions in stocks mentioned.