Google Responds To PayPal Lawsuit: People Have The Right To Seek Better Jobs
techcrunch.com
techcrunch.com
In its complaint (http://www.ebayinc.com/assets/pdf/fact_sheet/2011_PayPal_DOC...), PayPal alleges in meticulous detail how its chief negotiator over some two years on a major deal with Google for mobile payments on Android brought the deal between the companies to within a hair of signing and then, at the end of the process, did a series of interviews with Google to take a position working on its mobile-payment system. Not only was this person the chief negotiator on that deal, he was also PayPal's senior executive in charge of this area for his employer. On the eve of the anticipated signing (October 31, 2010) after two years of negotiations, Google told PayPal it wanted a restructuring the deal even while it was giving the negotiator a job offer. The negotiator accepted the offer, notified PayPal and was confronted about how this step was seriously problematic from a legal standpoint. He then changed his mind and told Google no. The parties once again revved up the deal and got to a signing stage for the second time by February, 2011. At that point, Google changed its CEO and, with Larry Page back in that role, Google killed the deal and hired the PayPal executive to lead its work in the mobile-payment area.
In the midst of all this, you also have a second PayPal employee who had been hired by Google in 2009 and was under a legal restriction not to solicit PayPal employees for a period of one year. With that restriction still in effect (or so PayPal alleges), she was actively soliciting not only the senior PayPal executive mentioned above but (according to the allegations of the complaint), a series of other PayPal employees who were part of the mobile-payments group.
It is way too early to tell what happened here, but here are a few thoughts:
1. The complaint is incredibly detailed, with much specific evidence of communications and events that do not look good for Google or the individuals sued. This level of detail is highly unusual for a complaint of this type and suggests to me that this is a very serious case, well-prepared and meticulous (and, of course, when the lead attorney is named G. Hopkins Guy III, as he is, you just know you are in trouble).
2. Employees owe a fiduciary duty to their employers to act in the best interest of the company and playing both sides of the fence at the end of a major negotiation is almost certain to raise serious issues about whether such duties were breached. This is possibly an even more serious problem here than is the trade secrets case.
3. California does not recognize the "inevitable disclosure" doctrine by which a former employee can be enjoined from taking a position on grounds that it will be "inevitable" that he would need to disclose important trade secrets in order to perform his duties. That said, any such case involves highly problematic issues and it would not take much evidence for a court to look at the whole picture and say, "what the hell is going on here." Google may be treading on thin ice here.
4. This sort of conduct usually evidences a cynical power play by a major company along "might makes right" grounds. Here, though, it is hard to believe that Google would be that cynical. Nor is PayPal a small company without resources. This part remains puzzling.
5. The real test will come if, as I assume, PayPal seeks to get a preliminary injunction blocking Google from using its mobile-payment technology because it allegedly based on a misappropriation of PayPal's trade secrets. This is where the evidence on both sides will come out and it will be much clearer whether Google did in fact commit wrongs as alleged. Until then, it really is hard to tell.
The federal Espionage Act of 1996 provides: "Whoever, with intent to convert a trade secret, that is related to or included in a product that is produced for . . . interstate . . . commerce, to the economic benefit of anyone other than the owner thereof, and intending or knowing that the offense will, injure any owner of that trade secret, knowingly . . . steals, or without authorization appropriates, takes, carries away, or conceals, or by fraud, artifice, or deception obtains such information . . . shall . . . be fined under this title [i.e., up to $5 million] or imprisoned not more than 10 years, or both."
That said, it would be highly unusual for the authorities to attempt to prove a criminal violation in this sort of case. I think the overwhelming odds are that it will be treated as a purely civil case.
But - in doing so, he has no right to pilfer his former employer's trade secrets and either use or disclose them in the new position. An employee can use his general skills and expertise freely in any position, as these are not tied to misuse of confidential, proprietary information. The tension lies between your right to work freely using your skills and restrictions placed on you to the extent you learn confidential things in your old position.
Thus, the general answer to your question is that, yes, you can work for another company doing a payment service even if you have worked for PayPal, but you can't use or disclose trade secrets from your former employer in your subsequent job. Do gray areas come up in such situations? All the time. Usually, they don't lead to lawsuits. In extreme cases, they do; in abusive cases, they also do, though these are not justified (i.e., where a former employer wants to chase and punish an employee just for having left employment). In the vast majority of cases in California, nothing happens and the former employee freely moves on - at times immediately, at other times after some delay. (Results may vary in other states where the law may be different and particularly where non-competes are enforced).
I'll be looking out for more of your comments in the future.
EDIT: Wow, lots of down votes just for asking a question?
If I come up with a really great idea, and we're bringing it to market, then you decide you don't like me and run off to a potential competitor with larger resources to get it to market sooner (and assuming we have non-compete or NDA clauses in our mutual contract), I absolutely have a right to sue you and your new employer.
This is well established and I don't know why there is such a fuss about it - its pretty black and white issue when it comes to ethics and morals, rather than the patent/copyright issue which most certainly has its grey areas.
I disagree, it's not a [necessary] natural conclusion based on logic axioms.
Aside from that consider this possible opposition: Patents are a contract of disclosure in return for a time-limited monopoly. I can well imagine that patents are a greater benefit to a society than industrial secrets; the knowledge is released in to the public domain and can be built on. Thus industrial secrets create a detriment, they hide knowledge that the society has spent resources on discovering (creating?).
Having briefly thought on this matter I think that forcing people to use patents to protect their IP instead of shackling inventors is probably the greater good. In any case presenting it as a done deal that needs no discussion is wrong IMO.
One could look at this from a Kantian perspective - if everyone hides their industrial/technological progress is that better or worse than everyone disclosing it?
In the payment business it's often the relationship with the merchants and processors, understanding how they work is even more important than the code or even the hardware. People are key in that business.
Forget about the industrial espionage, just hire a person who knows all the trade secrets. If PayPal and Google were a country there would be dead bodies on the streets of San Francisco.
Why would Mozilla want to put up a fight? It seems to me that One of Mozilla's biggest goals is working towards a better web, and that chrome as done quite a bit for innovation in the browser market.
I'm not saying that Chrome is going to become the IE6 of 2015, but if there is ever a point where Chrome can either do what is best for the web/user or be better for Google's bottom line they will always be choosing the latter.
Look at the state of flashblock and adblock in Chrome. It may have changed, but when I last looked at them they were both complete crap compared to their firefox equivalents. Google has very little incentive to improve their plugin system to make them more effective, but that would be counterproductive to what they are trying to achieve. I wouldn't be at all surprised if there comes a point when they are trying to push alternate formats for streaming video over Flash and it will suddenly become very easy to block Flash effectively and efficiently in Chrome.
I use Chrome and I like it, but I generally trust Mozilla to push for the best things on the web than any for-profit company, even Google.
That is exactly what happened. That's how Firefox was born if you remember. IE6 was dominant and Firefox rose from Netscape's ashes to challenge it and it turned out to be a very good thing.
(BCM43 is right that none of us at Mozilla have any reason to complain about ex-Mozillians and others helping to increase competition on the web.)
If you read this as Paypal negotiating to get some return out of the two years they paid their employees to negotiate a deal (which didn't close) it makes more sense. Lets say for the sake of argument that they pay them 200K/yr ($300K if you include benefits) and that they each vested 50K shares of Ebay stock, so maybe a $15/share gain on the stock over 2 years. That is $600K + $1.5M of 'cost' for the two execs ($2.1M) so settle out of court for $6M pay 2M to the lawyers and net $4M for the 'effort'.
Really sounds more like positioning to be paid off rather than a serious complaint.
Don't know that we've ever enforced such an agreement, but it is in ink just in case it's needed.
Depending on where you live it might not even be enforceable. Even large companies will put employee agreements in front of you that they KNOW aren't enforceable in a particular state but will do it since they know that most people don't know any better.
I had a particular instance when a company I was working for got acquired by a Texas based company and they sent us the employee agreement they use in Texas to us in California. There were no less than 4 completely unenforceable clauses in that contract. And this was a public company doing this.
If you live in Texas, though, you're screwed.
I figure when it comes time for me to move on it'll have to be to a "safe harbour" state that views such agreements as unenforecable.
I'm not overly concerned about it regardless, as should I leave it wouldn't be to a direct competitor (or likely anyone that could possibly benefit from my industry-specific knowledge) - it'd be somewhere completely out of our industry. And if they want to make an issue over someone as small as me, then I'll just find a new line of work for a few years. There's no way they could claim a "training investment" or "trade secret protection" if I was a programmer and left to become a carpenter or a roughneck or somesuch.
I was working at a place for 4 years before they tried to get me to sign one. They said it was standard and wasn't enforceable anyways, and I pushed my point (why bother having me sign if its pointless) and they eventually dropped it. No agreement is better than potentially having to deal with an unenforceable one down the road.
My point being, oversimplifying the issue by saying [pp] "I guess we don't own what's in our own heads" doesn't really move the discussion forward.
I find it weird but it is understandable from a competition point of view. If it wasn't this way you would probably see a lot more eager competitive hiring for opposing companies in order to gain an edge.
Otherwise, expect to deal with this.
Maybe I'm missing some key aspect to PayPal but what part of their tech/system is unique to PayPal, such that they can claim it is trade secret? I mean, if they aren't doing anything innovative and are just using existing technology in obvious ways (online payment processor), what could the trade secret possibly be? Something related to how they scale?
Seeking to hire a bank employee...as long as he/she empties a few bank safe boxes and brings them to me. Pay depends on the loot...
No.
If google sitting on a cash pile can't build or innovate, let them perish, what they have done is stealing