Google has issued a pretty tepid statement to what appears to be a highly problematic situation.

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.