PayPal and eBay have filed a lawsuit against Google, claiming the internet giant used insider knowledge from a former PayPal employee during the design of the new Google Wallet. The lawsuit was filed last week, mere hours after Google unveiled the new application, which turns smartphones into electric wallets. PayPal spent three years working on a deal in which it would handle payments for Android smartphones. They said Google ended the talks and subsequently hired PayPal's lead negotiator Osama Bedier. ''[Bedier] had an intimate knowledge of PayPal's capabilities, strategies, plans, and market intelligence regarding mobile payment and related technologies,'' the lawsuit said.

"He is now leading Google's efforts to bring point-of-sale technologies and services to retailers on its behalf.'' Google have rejected the charges, releasing the following statement: "Silicon Valley was built on the ability of individuals to use their knowledge and expertise to seek better employment opportunities, an idea recognised by both California law and public policy. We respect trade secrets, and will defend ourselves against these claims.'' The lawsuit raises some HR and employment litigation issues, like what exactly constitutes a trade secret. Seamus Burke, partner at Middletons law firm, told Human Capital that it is a common misconception for companies to assume that information relating to their business is confidential. "However, this is not the case unless the company can establish the information is not common or public knowledge and the company has taken appropriate steps to identify the information as confidential and steps to protect the information (eg limiting access)," he said.

"A classic mistake is a company claiming the identity of its clients as part of it confidential information, yet including client testimonials (which identify the client) on its website." Burke said that whilst Australian common law protects confidential information without the need for a signed agreement, it will not imply post-termination restraints on an employee. If a company wishes to do this, the terms must be expressly agreed and clearly set out in an employee's contract of employment.

"If the allegation that the key employee misused the confidential information of PayPal is true, and PayPal can establish that the information was confidential, then the employee would likely be found to be in breach of either his express contractual obligations or those implied into his contract by the common law. This is the equivalent of finding yourself in very hot and deep water," he said.