Facebook Follies

Is anyone out there taking this week’s lawsuit against Facebook and its founder Mark Zuckerberg seriously? I have had a few media calls, but I tell them all the same thing: This stuff is commonplace in the march to an IPO — the “I want some” phenomenon — and I have a very hard time doing anything other than shrugging at the news.

Feel free to dissuade me for being so blithe.


  1. Well, actually, this lawsuit has been around for quite a while and was not prompted by the IPO. In fact, if you read about the actions of Zuckerberg way back that prompted it, it looks highly probable that the lawsuit could be successful. I wouldn’t categorize all lawsuits the same just because an IPO is coming…

  2. Fair point. My hunch, however, remains that we see a quick equity swap across, and it all goes away.

  3. funny, im a senior in college, and have been a facebook user longer than anyone that is currently blogging about it. i still dont see how it adds value to my life. worthless if you have to ask me…

  4. Probably. But the defendants have been fighting hard for a while and could have settled it for a lot less a long time ago, in all likelihood. As IPO or exit draws nigh the pressure to settle certainly ratchets up. But the longer the suit survives the more nerve the plaintiffs will have, no doubt.

  5. I don’t know who the troll is up above, but I would say that “highly probable” is wildly overstating the case. From the sounds of it, a couple of guys with an idea but no programming ability asked Zuckerberg to help them out (i.e., didn’t even hire him) and he later started a site with a similar focus — and possibly some of the same code, which he developed and wasn’t paid for. That hardly sounds like an IPO-derailing case to me.

  6. Paul Malin says:

    It just keeps making me think of the RIM patent case.

  7. Hmm. From what I’ve read in the coverage, the guys who hired Mr. Z. had a fairly detailed plan in place. The lawsuit was brought 3+ years ago and it _almost_ seems as though the fact that it is still in the hopper means (a) the plaintiffs are serious and (b) Facebook have been playing “big company drags out the case so it goes away”.
    The RIM case was clearly bogus. Not sure the same is true here. If the “facts” as presented elsewhere are indeed accurate, it would seem Facebook is on some relatively thin ice, especially in light of the rumoured IPO.
    I’d guess settlement. And a reasonably sizeable one. We shall see!

  8. So it’s “commonplace” with IPOs for people to time-travel three years into the past and file “I want some” lawsuits? God I love blogs.

  9. “hack” — If you have been around capital markets for any length of time — and I’m getting on 15-20 years now — you know what I’m talking about. Inane claims and trivial lawsuits proliferate and/or dig in as you get closer to an IPO and claimants become emboldened. No more, no less.

  10. Here’s a link for the less-informed of us:
    I think you’re right that the more popular Facebook has become, the more ConnectU has dug their heals down. Whatever payoff they might get from FB could be a bigger outcome than with their current venture.
    And, even though the following quote may be true, it’s a tad mean from my point of view:
    “Only one of the students had an idea significant enough to build a great company. That person was Mark Zuckerberg.”

  11. Wow, some vicious people on here. Mathew Ingram calling me a ‘troll’ just because my viewpoint differs from his? He’d be wise to do a bit of research and inform himself about the facts (and the law) before he starts chirping away and calling people names. It’s laughable that he even suggests that when one hires a programmer company that the programmer’s entitlement to the code is based on whether the employer can program or not! Whether Zuckerberg was paid or not for the programming he did for the plaintiffs also has no bearing on his entitlement to the code. His proper legal remedy would have been to sue for non-payment, not mis-appropriate the code. This is not the wild west where ‘vigilante’ justice prevails. And yes, I agree that the case will be likely settled before the IPO.
    As for the comments posters have made about RIM, that company’s judgement was really bad as they could have settled that lawsuit for a mere pittance years earlier instead of digging in their heels. And, it’s very telling about RIM’s weak position on that matter, that they actually resorted in a court demonstration to misleading the judge and plaintiff during the case by using technology that wasn’t developed at the time in trying to prove they had prior technology. This was one of the major reasons they did not prevail. This is documented and has been reported in the press many times.
    ‘Just because’ someone has a lawsuit against a successful company does not automatically make them a ‘troll’, of the patent kind or otherwise. However, I do agree that many lawsuits against successful companies are brought as a result of the latter’s success rather than anything substantive. But this just does not mean that all are. Let’s think before we talk!

  12. Hey Leon — relax. Troll isn’t that vicious a word. And I have done some research, and intend to do more. Let’s agree to disagree on this one.

  13. Paul Malin says:

    When I commented on RIM I wasn’t meaning to insinuate that ConnectU were trolls (or that the NTP were trolls)…

  14. Facebook isn’t going to get shut down by this rediculous lawsuit. If you look at the website bringing the suit it’s laughable. Facebook is making 90 million a year and their revenue growth must be incredible.