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Who Owns the Concept if No One Signs the Papers?
Who Owns the Concept if No One Signs the Papers?
Mark Zuckerberg of Facebook is being sued by Tyler Winklevoss, above, and his twin brother, Cameron. The twins, both rowers, were on the United States team at the Pan American Games in Brazil.
WHO owns a bright idea? If the technology associated with an idea is new and the opportunities it offers are valuable, it will have many authors — most of whom may argue over ownership.
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Mark Zuckerberg.
When disputes over the provenance of an idea become particularly turbid, disappointed entrepreneurs will look to the courts, which often are of little help. As Lawrence Lessig, a professor at Stanford Law School, said, “The general rule is that ideas are free unless strapped down by contract or patent.” In practice, a great idea is owned by whoever expresses that idea most successfully.
Consider the case of Mark Zuckerberg, founder and chief executive of Facebook, the fast-growing social networking Web site, who is being sued by Cameron and Tyler Winklevoss, twin brothers who were founders of ConnectU, another social network.
Today, Facebook enjoys much of the glamour that Google had when it was new. As of July, more than 30 million people, mostly young and college-educated, had registered on the site, according to the company. Facebook’s users share information about themselves with friends, send private messages to one another and hang out in groups formed around different interests and hobbies, where they can swap Web links and files like photographs and videos.
“It is one of the sites with true utility, focused on real relationships, rather than Webcam girls with 10,000 friends,” Jonathan Abrams, the founder of Friendster, the first successful social network and now the chief executive of Socializr, an events planning Web site, wrote in an e-mail message.
This utility and privacy may soon have real value. For now, Facebook is a private company: its value is whatever its investors, who include the venture capital firm Accel Partners and the angel investor Peter Thiel, a co-founder of PayPal, tell each other it’s worth. But last year, according to published reports, Yahoo offered $900 million for Facebook, which earns its money from demographically targeted advertising and sponsorships. The start-up was not for sale then, but when it is sold or floats shares in an initial public offering, Mr. Zuckerberg, who is 23, will be rich.
The Winklevoss brothers and Divya Narenda, another ConnectU founder, contend that Facebook’s founder stole the idea from them. In a suit filed in 2004, the ConnectU founders accused Mr. Zuckerberg of lifting their site’s source code and business plan when he worked for ConnectU as an unpaid programmer. They are asking that Facebook’s assets be transferred to them.
Here are the facts that are not disputed: In 2002, when the Winklevoss brothers were juniors at Harvard, they conceived what was initially called the HarvardConnection, which was to be a social network for the college. In November 2003, they asked Mr. Zuckerberg, who was studying computer science at Harvard, to develop the site’s software and database, promising to compensate him later if the venture prospered.
Mr. Zuckerberg abandoned the project in February 2004, a month after registering the domain name thefacebook.com. By the end of that February, his new site, also a social network for Harvard, had registered half the college’s undergraduates. By April 2004, it had spread to other Ivy League schools.
Very quickly, thefacebook expanded to serve other universities, then high schools, then organizations as varied as McDonald’s and the Marine Corps, and finally the general public. By contrast, ConnectU never really got started: it didn’t open until May 2004, and, overshadowed by what became, simply, Facebook, today it has no more than 70,000 registered users.
In their suit and in public statements, the Winklevoss brothers contend that Mr. Zuckerberg promised to finish coding before the brothers left college in June 2004 and that he procrastinated to gain a competitive advantage. Mr. Zuckerberg and Facebook’s lawyers say that there was no binding contract between the two parties.
Who is in the right? Judge Douglas P. Woodlock of United States District Court in Boston, who is considering a motion by Facebook to dismiss ConnectU’s suit, might agree with Mr. Zuckerberg. At a hearing on July 25, he scolded John F. Hornick, ConnectU’s lawyer, over what the judge saw as his inability to provide documentary evidence, saying, “Dorm-room chitchat does not make a contract.” He gave ConnectU two weeks to prepare a better case.
The parties and their lawyers declined to be interviewed for this column.
I SUSPECT that Facebook would not exist had it not been for ConnectU. But in an interview, R. Scott Feldmann, an intellectual property lawyer and a partner at Crowell & Moring, explained why the judge should nevertheless dismiss the case.
Ideas, Mr. Feldmann explained, are protected either by trade-secret contracts or by patents and copyrights. “Trade secrets may be maintained indefinitely,” he said, but “it does not appear that ConnectU had Zuckerberg sign a nondisclosure agreement, and disclosing a trade secret to someone without doing so would ordinarily result in loss of any trade secret status.”
At the same time, Mr. Feldmann said, “copyright will not protect ideas themselves, only their expression” — in a Web site’s underlying source code, for instance. But if Mr. Zuckerberg was an unpaid, casual worker at ConnectU, and not an employee, then “he owns the code,” Mr. Feldmann said. Thus, even if the ConnectU plaintiffs can prove that the codes of two social networking sites were similar (an argument that Facebook seems confident it can refute), the Winklevosses might have no claims on Mr. Zuckerberg.
“On the surface, it appears ConnectU will have some challenges,” Mr. Feldmann said.
Many may sympathize with the Winklevoss twins. But in the absence of any formal contract, the twins are, in effect, arguing that they have rights to Mr. Zuckerberg’s imagination and experiences. In my book, that would be a constraint on the free marketplace of ideas.
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