Facebook and the Value of Getting it in Writing

The Sunday New York Times this week ran an article by Jason Pontin covering the ongoing lawsuit against Mark Zuckerberg, the founder of Facebook, brought by Tyler and Cameron Winklevoss, the founders of another social networking site called ConnectU. In case you have not been following the lawsuit, the Winklevoss brothers claim that Zuckerberg stole the source code and business plan of ConntectU during the time that Zuckerberg worked for ConnectU as an unpaid programmer while he and the Winklevoss brothers were students at Harvard.The facts of the case (which are described in detail in the article) read not unlike a good law school essay exam fact pattern. It is not disputed that Zuckerberg agreed to assist in the development of software for ConnectU.  The terms under which he provided this assistance are, however, far less clear.  In fact, other than an unwritten understanding as to compensation, there may have been no real agreement between the parties at all.  While Zuckerberg did do some work for ConnectU, he later abandoned the project and proceeded to start his own social networking site. As we now know, Zuckerberg’s own site went on to become the phenomenon that is now Facebook, while ConnectU went on to become yet another also-ran in the world of social networking sites.

Pontin does a solid job of discussing the legal issues around the ownership of intellectual property rights upon which much of this case turns. In doing so, he also makes a key point — in the absence of any contract between ConnectU and Zuckerberg, ConnectU is in essence arguing that they have some innate legal right to Zuckerberg’s imagination and experiences. This is (at best) a very difficult case to make and (at worst) one that is simply not true.  More importantly, it is one that could have been avoided entirely had ConnectU simply required Zuckerberg to sign an agreement assigning ownership of the work product he produced to ConnectU and agreeing maintain the secrecy of the business plan and other proprietary information of ConnectU.
It is true that actually getting a contractor to sign an invention assignment and nondisclosure agreement can be more easily said than done.  Perhaps as a result, I have even heard some companies (particularly start-ups) complain that such agreements may “poison” the relationship with the contractor before it even starts (particularly when the contractor is also a friend).  That said, as this case and others like it continue to underscore, not signing such an agreement early on in the relationship with any contractor, particularly one involved with the development of intellectual property, can do a lot more to “poison” the future prospects of the company.

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2 Responses

  1. Ouch! As a contractor working in the web design world I can say that I would never sign one of those contracts, unless it was a time based clause (ie “cannot work on related project for x months”). At stake is my ability to work on ANY project relating to the industry in which I signed a non-disclosure on for fear that if I launch a good product for a different company in the future the company that I signed an NGA with will come to me looking for money for “stolen intellectual property” that was probably mine to begin with!
    In the case here, if the programmer was unpaid and there was no contract then, there simply is no case.
    In defense of Zuckerberg, he did something different – and that’s why he won. Whether that was how he promoted it to his classmates or in how he scripted the user interface, something was different and the people responded to the one they liked best.
    After reading the article and seeing the claim that Zuckerberg delayed ConnectU’s launch to give him an edge, I’m reluctant to say that ConnectU should take a walk, but all the same, they’re wasting their time.
    Thanks for the links.

  2. Actually, ConnectU’s position doesn’t surprise me at all in it’s legal thinking. I once had a “confidentiality agreement” thrust in front of me that appeared to say in the fine print, that any creative or other idea I might conceive of, at any time and under any circumstance, whilst I was employed at this particular law firm, became the property of the firm! It’s funny but not so funny!

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