There is an old Cuban saying “dime con quien andas y te diré quien eres” which translates to “tell me who you hang out with and I will tell you who you are.” It seems that these days being identified as an Internet company does not say much good about you. Just a week after Facebook was found planting stories with bloggers against Google, PayPal has filed suit alleging that Google reneged on a deal by hiring away PayPal’s employees.
PayPal is a well-known on-line payment service. Google is the internet services behemoth offering services which span everything from search engine, to office suite, to e-mail, to social networking. PayPal filed suit against Google, a former officer of eBay and a former officer of PayPal before the California Superior Court for San Mateo County (a Court that the cloud blogger has appeared before).
The Complaint alleges misappropriation of trade secrets, breach of contract, interference with a contractual relationship and breach of fiduciary duty. It tells how Google approached PayPal and negotiated for two years to have PayPal provide payment services for Google mobile devices. On the eve of signing the deal, Google backed out and hired away the PayPal executive who had been negotiating on behalf of PayPal, Osama Bedier. According to the complaint, Stephanie Tilenius, a former a former eBay executive and named defendant in this suit solicited Mr. Bevier and induced him to join Google. After joining Google, Bedier also solicited and tried to lure away other PayPal employees.
According to the complaint:
[F]rom 2008 to 2010, Google and PayPal were negotiating a commercial deal where PayPal would serve as a payment option for mobile app purchases on Google’s Android Market. During that time PayPal provided Google with an extensive education in mobile payments. [Defendant] Bedier was the senior PayPal executive accountable for leading the negotiations with Google on Android during this period. At the very point when the companies where negotiating and finalizing the Android-PayPal deal, Bedier was interviewing for a job at Google – without informing PayPal of this conflicting position.
Supposedly, Google used Mr. Bedier’s knowhow to craft its new mobile wallet mobile payment strategy which Google announced on May 26, 2011, the date the suit was filed.
Every month across the United States large media companies or business associations file dozens of lawsuits accusing individuals of copyright infringement based solely on claims that film or music files were downloaded to their IP-address. An IP-address is a unique number associated with a particular online account. Over the last few years tens of thousands of suits have been filed on similar grounds, many resulting in settlements of thousands of dollars. Often the individual defendants are forced into such settlements by fear of statutory damages and costs of litigation even where they feel that they were wrongly accused. As a result, many commentators have referred to these lawsuits as unfair and a legal a shakedown.
A new decision issued on April 29, 2011, by a judge in the Eastern District of Illinois brings into question the future of such suits. In VPR Internationale v. Does 1-1017, (2:2011-cv-02068) Judge Harold A. Baker denied a Canadian adult film company’s request to subpoena ISPs for the personal information connected to the IP-addresses of their subscribers. The court reasoned that since IP-addresses do not equal persons, no defendants had been identified in the suit and there was no adversarial process. Since, under federal rule of civil procedure rule 26(d)(1), no discovery may be conducted before the parties to the suit have conferred absent special leave from the court, the judge reasoned that VPR could not go on an ex-parte fishing expedition.
The Court’s concern clearly went beyond the mere procedural issue. Judge Baker cited a recent child porn case where the U.S. authorities raided the wrong people, because the real offenders were piggybacking on their Wi-Fi connections. The judge noted that, based on this example, defendants in VPR’s case may have nothing to do with the alleged offense either. “The infringer might be the subscriber, someone in the subscriber’s household, a visitor with her laptop, a neighbor, or someone parked on the street at any given moment.”
The fact that the suit involved the downloading of adult content was a significant factor in the case. Judge Baker noted that “the embarrassment of public exposure might be too great, the legal system too daunting and expensive, for some to ask whether the plaintiff VPR has competent evidence to prove its case.”
Baker concludes by citing another case for the proposition that until at least one defendant is served the Court lacks personal jurisdiction over anyone. The Court would not support a “fishing expedition” for subscriber information under the circumstances.
VPR responded to the initial denial of the subpoenas by asking for certification of the following question for interlocutory appeal:
Defendants’ identifies are unknown to the Plaintiff. Instead, each Defendant is associated with an Internet Protocol (IP) address. Internet Service Providers (ISPs) know identity and contact information associated with each IP address. Is the Plaintiff to entitled to discover this information by serving ISPs with subpoenas duces tecum under Fed. R. Civ. P. 45?
The Court refused to certify the question. We will have to wait to see if other courts follow this decision.