DISQUS

VentureBeat: Winklevoss twins made $65 million on Facebook “copycat” settlement

  • Haggie · 10 months ago
    No reasonable plan to become profitable, intellectual property issues, clueless CEO. Do people still think this company is worth billions?
  • Eric Eldon · 10 months ago
    I'm afraid you're not well-informed here, Haggie. More on that shortly....
  • Matt Shaulis · 10 months ago
    Not to mention... The point is now how awesome Facebook is or is not... it's the fact that the litigation between ConnectU and Facebook resulted in a sweet 65 million bones! Screw the billions... I can think of more than one way to enjoy the life with $65,000,000.

    P.S. A.) what is a reasonable plan and B.) do you sit in on the board meetings and know that they don't? C.) no less than 1/2 (possibly 2/3 depending on how you slice it) of the IP issues were just solved to the tune of $65MM... D.) CEO's get replaced all the time (not to mention they said the same thing about steve jobs once.... once.) E.) Yes.

    :)
  • nickhalstead · 10 months ago
    "but this is PHP code, not exactly hard-to-write stuff." - are you a coder? if you were you wouldnt make a stupid throw away statement like this, PHP drives a very large % of the best websites out there, and that with 150 million users on Facebook (written in PHP) that you don't think it is complex?

    All programming languages are just tools, what you do with them is down to the intelligence of the individual. Unless of course your still playing with logo?
  • Matt Shaulis · 10 months ago
    "PHP drives a very large % of the best websites out there"

    Yeah... and do you know why that is? "...this is PHP code, not exactly hard-to-write stuff..."

    P.S. (Because that's my motif for this thread): "a stupid throw away statement" ... hmm... pot, meet kettle.
  • Eric Eldon · 10 months ago
    Thanks for the backup, Matt.

    Nick, you seriously think Zuckerberg personally wrote Facebook code to scale to 150 million users (many of whom come on the site every day) while he was prototyping profile pages or whatever for ConnectU?

    Give me a freakin' break.
  • d ashcart · 10 months ago
    I'm with Nick on this.

    Come on, Eric -- you just type words in an editor, not exactly hard-to-do stuff.
  • Wil · 10 months ago
    Wasn't the settlement paid in Facebook common stock, not cash? At the ridiculous MSFT valuation?

    If so, the settlement is probably more realistically valued around $4M (assuming a $1B "true" valuation) - still not chump change, but probably less than a trial would cost in legal fees, lost employee time, negative media attention, etc.
  • Eric Eldon · 10 months ago
    That's what we don't know. I'd be curious to.
  • Eric Eldon · 10 months ago
    It was a combination of both cash and stock
  • Mike Rundle · 10 months ago
    Wow, glad to see this article wasn't slanted in favor of Facebook in any way....

    Did you read any of the discovery documents or code submitted? They had a pretty solid case against Zuckerberg, and this payment is evident of that.

    "Perhaps proof of actual code that Zuckerberg wrote for ConnectU, then ported to Facebook — but this is PHP code, not exactly hard-to-write stuff."

    You're an idiot.
  • Eric Eldon · 10 months ago
    Real mature, Mike.

    As you should have been able to tell from the article, I just don't think the concept of social networking for colleges is something that ConnectU could ever claim to possess "intellectual property" for. Friendster has the patents on social networking -- and those don't seem to matter.

    How is coding simple profile features in PHP something that any one company can own?

    And how about you mind the personal attacks.
  • Mike Rundle · 10 months ago
    Like I mentioned in my comment you obviously have not read anything from the case.

    Zuckerberg was under contract with ConnectU as a developer, but instead of delivering any of the code he was being paid to work on, he launched The Facebook just a month or two later. In the discovery documents there are code samples comparing proprietary ConnectU code to initial code from The Facebook. The issue isn't that "anybody can write a social network" it's that Mark was under contract with ConnectU to develop code and instead took their code and turned it around into his own service, all while still being under contract. You're making general arguments about social networking patents when that's not what the case is about at all.
  • Eric Eldon · 10 months ago
    ConnectU actually had multiple lawsuits, and its accusations ranged from misappropriation of trade secrets, to breach of confidence to fraud. The contract you reference was only one part of what the settlement related to, and it wasn't tightly worded enough for the judge.

    You don't strike me as an expert on this settlement.
  • Andy · 10 months ago
    Sorry. You just don't seem to understand the legal concept of intellectual property.

    ConnectU doesn't need to claim ownership of social networking to have a case against Zuckerberg.

    Mattel sued the designer of Bratz dolls because he was working for Mattel when he came up with Bratz. Court agreed with Mattel. Awarded Mattel $100m. Also banned the selling of Bratz. MGM, the owner of Bratz, must remove Bratz from retailers at its own cost.

    Notice how Mattel never claimed that they owned the concept of dolls. Not that it needed to. Likewise, ConnectU never needed to claim ownership of social networking to win their case.

    The creator of Bratz worked for doll maker Mattel when he came up with the Bratz doll and that was a violation of Mattel's intellectual property.

    The creator of facebook worked for social network ConnectU when he came up with the social network facebook and that was a violation of ConnectU's intellectual property.

    Is that clear enough?

    If actions like that wasn't illegal, then no companies would ever spend a single dime on product development. They could be paying salaries and all other costs to develop new products and their employees would just start up copycat competitors on the side.
  • Eric Eldon · 10 months ago
    It's not clear enough, because you don't explain why you think ConnectU's specific claims are valid.
  • Andy · 10 months ago
    You're missing the point.

    I don't know whether ConnectU's specific claims are valid or not - because I'm not the judge on that case.

    The point is that your claim that ConnectU doesn't seem to have a case just because they don't have "ownership of social networking" is laughable.

    There're plenty of scenarios under which ConnectU can have a very legitimate case against facebook. And guess what? They don't need to have "ownership of social networking" to have a case.

    I brought up the case of Bratz and Mattel just to show you one case of intellectual property violation that has a strong resemblance to the situation of facebook and ConnectU.
  • Eric Eldon · 10 months ago
    Andy, I understand your point -- and it's my fault for not being more clear about what I consider to be fact vs what I acknowledge to be my own opinion.

    Maybe ConnectU "can have a very legimate case against facebook" -- but that's not how the courts have decided the issues so far, and there's still a lot of missing information about what was involved in the settlement.

    Certainly, Friendster's patents are not directly relevant to any contract Zuckerberg signed with ConnectU. But the lack of patent enforcement by Friendster (so far) highlights the difficulty that consumer-facing web services have in enforcing any sort of IP right over basic web features -- especially when developed in open-source programming languages like PHP. What exactly did Zuckerberg take from ConnectU that wasn't already in the public domain?
  • covati · 10 months ago
    burn! /end 80's dis

    By the way Eric, your grasp of the case and understanding of IP law (and slam of PHP) does come off as somewhat idiotic.

    Call it like you see it ;)
  • Eric Eldon · 10 months ago
    Care to back that up with substantive points?
  • covati · 10 months ago
    I'll have to say, that my own stupidity precluded me from clicking on the reply button to your conversation with Mike.

    Your article is not without merit, but it comes off as if there is no issue to stealing code. It's not a question about whether or not Zuckerberg wrote his own social app and the Winklevoss bros are cashing in. They are saying that he took the code they paid him to write and used it to create his own site. That sounds like stealing in my book.

    To make a statement to the effect that friendster owns the blanket patents to social media is also a bit broad and seems to undermine your argument.

    That being said, you don't pay someone $65 MM who doesn't have a case. The fact that facebook coughed up such a sizable chunk speaks to their culpability.
  • Eric Eldon · 10 months ago
    Thanks, Adam. My mention of the Friendster patents was a more general statement about companies that try to claim IP ownership over basic web features and code written in open-source scripting languages like PHP. Clearly, there are other specific legal issues at play here.

    Generally -- and this is why I mentioned the Friendster patents -- I am cautious of companies using legal means to claim credit for the work that employees or contractors do separately.

    I agree, the Winklevoss brothers *may* have a case but not all of the evidence they (or Facebook) might have is available. To me, it's still premature to believe their claims about what they think they have a right to, given our lack of complete information.
  • covati · 10 months ago
    I also have a strong distaste for anyone trying to interfere with, or claim ownership of, their employees separate work. It's just slimey.

    Of course, I've had some great ideas that were directly related to my job. However, many of the insights I had that drove those ideas were conceived in direct line with my work. Ethically, I had no choice but to contribute those ideas to my employer.

    It's tough, but you have to remember that the thinking you do on company time, in many ways (many legal ones) does belong to your employer. If you are working hard on social sites for your employer, and in doing so have some great insights into social networks, you can't just claim ownership of those ideas.

    If you want to take advantage of those ideas, you should quit your job and start from scratch with those ideas as a seed. You cannot by any means bring over any of the work (code) you accomplished when working for that company.

    It looks like Facebook was conceived on the wrong side of this line, or well within the grey area. That's what I get out of the fact that they paid the $65MM.

    Lesson: Don't let your day job and side projects mix. It's just a bad idea.
  • silicon valley dropout · 10 months ago
    lol the php fanboys dont like your statement. but i cant really hate on the brothers they are 65 million dollars more richer then me. so whatever they did or not do for the current facebook is a bit pointless now that 65 million is theirs.
  • Joel Strellner · 10 months ago
    Wow, Eric. You are so defensive about your position on this article, that I am tempted to no longer read VentureBeat. Posting a rebuttal to every comment with an opinion that doesn't match your own is just immature. Fortunately, you aren't the only writer here. When you put an opinion in an article, like the PHP statement, expect others to have an opinion. It is their right, just as it is yours.

    As far as the PHP statement, PHP can be "not exactly hard-to-write stuff", but it can also be extremely complex. Without seeing the code in question, none of us can make that call.

    This case does have a lot of interesting twists, and, frankly, I am not sure who was technically on the right side of the lawsuit, but I do think that the brothers made out good. I just hope that the payoff was truly theirs and not just an elaborate scheme to get money out of Zuckerberg.
  • Eric Eldon · 10 months ago
    I'm sorry if I've come across as defensive. I want to understand where readers disagree with me, and a little argument is a good way to help me (and hopefully others) understand each other better.

    Certainly, I agree with your point about PHP being what developers make it.
  • jj · 10 months ago
    "Anyway, as I’ve said before, it’s hard for me to see what exactly the Winklevoss’ could have really been holding over Zuckerberg’s head."

    Eh, if you don't have any facts, and are writing opinions, please don't write for the front page of venturebeat
  • anonymous · 10 months ago
    SUGGESTION: Add a poll to every article ...

    (A) The writer is an insightful

    (B) The writer is an idiot