Google sued over 'phone wallet'

Google Inc hopes to nudge consumers and merchants into a world where the smartphone has replaced the wallet as the container for credit cards, coupons and receipts.

While it tackles that challenge, Google also will have to spar with the biggest online payment service, eBay Inc's PayPal, in a legal battle that could be filled with corporate intrigue.

After Google unveiled its tap-to-pay technology in New York on a smartphone with its Android software, PayPal struck back in a California court with a lawsuit alleging the service is the byproduct of intellectual theft and betrayal.

The central figure in the 28-page complaint is Osama Bedier, now Google's vice president of payments after spending nine years at PayPal. He was part of the team that showed off a new service called "Google Wallet."

Google vice president of commerce Stephanie Tilenius speaks during a news conference, Thursday, May 26, 2011, in New York. Google wants the smartphone to be the wallet of the future, a container for digital credit cards, coupons, receipts and loyalty cards that can be "tapped" to terminals in stores. [CFP]

The suit alleges Google hired Bedier four months ago primarily to pick his brain and steal PayPal's trade secrets for its new phone-as-a-wallet service.

PayPal alleges Bedier put the latest information about PayPal's mobile payment strategy on his own computer just before he started his new job at Google. The suit also names a former eBay executive, Stephanie Tilenius, who went to work for Google in 2009 and began to woo Bedier last year.

Tilenius, Google's vice president of commerce, also appeared at the New York event to tout the benefits of Google Wallet.

Google made its first formal job offer to Bedier on November 12, according to the lawsuit, which was filed in Santa Clara County Superior Court in California. That was just three days before Google CEO Eric Schmidt appeared at a technology conference and talked about the possibility of Google creating a phone that could supplant wallets.

In Google's vision detailed on Thursday, shoppers will touch their phone screen to select a card, then tap the phone to a credit-card reader in a store or restaurant. Google would make money by selling coupons and advertising that come along with the experience.