Facebook Wins Lawsuit

    June 27, 2008

Social networking site ConnectU sued Facebook founder Mark Zuckerberg for stealing their idea. They allege he used the source code they hired him to create for their site.

Now four years later Facebook is celebrating their four year anniversary, and that the lawsuit against them is finally settled – in Facebook’s favor. Facebook asked that the case be dismissed, for lack of evidence, and that happened. ConnectU then filed another lawsuit against Facebook in March, which is now closed.

Yesterday Judge James Ware of Federal District Court in San Jose, Calif., stood behind a February settlement between the companies. Also named were Zuckerberg’s Harvard classmates, twins Cameron and Tyler Winklevoss and Divya Narendra.

Facebook now has upwards of 39 million members and expanded to go beyond college students. ConnectU is said to have 15,000 members at 200 schools.

There is plenty of drama behind the suit and the story of Facebook’s beginnings. Zuckerberg’s writings say that he was drowning his sorrows in his dorm room after he got dumped. He may have lost in love, but he came up with a plan. He’d hack into Harvard’s student directory, download photographs of students, and post them online. He said the pictures were awful and compared them to farm animals. He decided to let people rate which was better – the people or the animals. That alone is funny.

As part of the suit, ConnectU questioned Facebook’s valuation of $15 billion and if the original settlement was valid. They noted that the valuation in the press release about Microsoft’s investment in Facebook, and the valuation given by Facebook’s board of directors didn’t match.

Then they said the father of the twins (and ConnectU shareholder) named in the suit, Howard Winklevoss, didn’t sign the original settlement, making it invalid. That didn’t work.

Facebook countered saying ConnectU signed the settlement and knew exactly what they were doing, saying: “ConnectU’s founders were represented by six lawyers and a professor at Wharton Business School when they signed the settlement agreement. The ConnectU founders understood the deal they made, and we are gratified that the court rejected their false allegations of fraud.”

Rolling Stone wrote a 5-page article on the battle over Facebook. From that article, one of my favorite lines from Zuckerberg, (remember this is coming from the mind of a teenage coder who decided to study psychology) is this insight:

“People are more voyeuristic than what I would have thought.”

His angst, programming skills, and that insight have turned a very quick success. And it appears that Zuckerberg is vindicated.