Facebook is reportedly preparing to settle a lawsuit that could have turned the popular social-networking site on its head. The suit by ConnectU alleges Facebook's founder, Mark Zuckerberg, swiped trade secrets, source code, and intellectual property from his fellow Harvard University students, brothers Cameron and Tyler Winklevoss, and their friend Divya Narenda.
The March 2007 lawsuit claims that Zuckerberg, now Facebook's CEO, was hired to develop a Web site for the Harvard students. That Web site was to be called ConnectU, an online social-networking site similar to Facebook. Zuckerberg promised to keep the plans a secret, but registered the Facebook.com domain name shortly after he began work on the ConnectU project, the court filings indicate.
The Winklevoss brothers and Narenda are asking the court to shut down Facebook, give them control of the property, and award them profits from the popular social-networking site. Facebook has about 30 million members.
The suit claims that Zuckerberg, who was a computer-science major at Harvard for two years before launching Facebook and moving to California in 2004, began working on ConnectU a year earlier. A judge already threw out the first lawsuit the Harvard students filed against Facebook, citing a legal technicality.
The parties involved in the lawsuit were not immediately available for comment, but The New York Times is reporting that Facebook is finalizing a settlement with ConnectU's founders. Terms of the settlement were not disclosed. The Times' source was cited as a person briefed on the status of the case.
The report has merit. Facebook filed a countersuit against ConnectU last year, accusing the site of unfair business practices. Now ll motions in the case against ConnectU have been terminated.
Who Really Cares?
In order to win the suit, the plaintiffs would need to demonstrate that Facebook is very similar to the pitch they made to Zuckerberg. If the pitch was very broad and Zuckerman merely refined it, the idea could be 99 percent his. If the students provided Zuckerberg with complex blueprints, legal experts said, it would be a different scenario.
On the other hand, social-networking analysts doubt the Facebook drama with ConnectU had any impact on which social network consumers use.
"I would be willing to bet that most of its users have never heard of the lawsuit. I doubt it was a factor in deciding which social network to use," said John Barrett, a social-media analyst at Parks Associates. "Your average person out there on the Internet, especially teenagers, have probably not heard that Facebook is in legal trouble."
Settling the lawsuit, if in fact it is about to settle, is surely a relief to Facebook from the perspective of legal expenses. But Barrett doesn't expect a boost in the user base. Few, he said, were holding out on using Facebook to see the conclusion of this case.