In 2010, David Fincher’s movie “The Social Network”, based on the story behind the creation of Facebook, caused a lot of buzz and interest around the Winklevoss Twins and their infamous lawsuit against Mark Zuckerberg. Tyler and Cameron Winklevoss accused Zuckerberg of stealing their idea for a social network while the three of them were students at Harvard University. What followed was a series of lawsuits, investigations and accusations made against Zuckerberg. However, could this all have been avoided from the start? Could the Winklevoss Twins have been the founders of the largest social network in the world if they had played their cards differently? No one can give us the answers to these questions, but one thing is very clear: The area where Tyler and Cameron went wrong was their legal protection.
In 2003, the Winklevosses, along with their business partner Divya Narendra, contacted Zuckerberg about their new project called HarvardConnection, which at the time was a social networking website aimed at Harvard students. Allegedly, Zuckerberg then entered into a verbal agreement with the Winklevosses, promising them to help build their website platform in exchange for equity.
During that time however, Zuckerberg was deep in the development of what was then called TheFacebook.com. Between November 2003 and February 2004, he communicated with the twins through a series of 52 emails and a couple of in-person meetings. Zuckerberg then went on to launch TheFacebook.com in February 2004 without notifying the twins. The Winklevosses found out about the site in The Harvard Crimson. A couple of days later, the Winklevosses and Narendra sent Zuckerberg a cease-and-desist letter.
Even though HarvardConnection eventually launched a few months later as ConnectU, it failed to gain popularity and views like The Facebook. ConnectU’s founders filed a lawsuit against Zuckerberg in 2004, starting a legal battle that went on for years.
In February 2008, the two sides finally settled with Facebook acquiring ConnectU’s assets in exchange for 1.25 million shares of Facebook (worth around $180 million today) and $20 million in cash.
Where did the Winklevoss Twins go wrong?
- An idea cannot be copyrighted
Despite popular belief, one of the most important things that people in business should be aware of is that an idea is not copyrightable. Copyrights protect “original works of authorship” that the author fixes in a tangible form whereas patents protect inventions, but neither one of them can protect an idea.
The concept of a social network that connects people from all over the world via a website in which you can share pictures, videos and text cannot be protected by the use of a copyright, but does that mean that people with original concepts such as the Winklevoss Twins cannot make sure their ideas are not stolen out from right under them by trusted employees or others? Quite the opposite actually – intellectual property (IP) rights in ideas are highly protectable when the correct legal modalities are used to invoke that protection.
- Non-compete agreements / Restrictive covenants
If only the Winklevoss twins had asked Zuckerberg to sign a non-compete agreement or had included such clause in his contract, they might have been much more successful in proving that their allegations of Zuckerberg’s “theft” were true. It is important for inventors and business owners to be aware of their legal options when it comes to protecting their ideas, and one of them is requiring their employees to sign a restrictive covenant. Such documents often restrict an employee’s right to conduct activities in competition with their former employer after the employment relationship has ended. As a result, if Mr. Zuckerberg had signed one, he wouldn’t have been able to launch The Facebook, allowing the twins to possibly gain a large initial market share and establish their social network.
- Non-disclosure agreements
A non-disclosure agreement (NDA) is one of the most effective methods of protecting any and all ideas from being stolen or otherwise exploited by others. A well-written NDA could have prevented Zuckerberg disclosing unauthorised any of the aspects of the twins’ ideas and as a result allowing them to continue with their project. Since the main purpose of this agreement is to maintain the confidential status of a project, tThe Winklevoss Twins would have greatly benefited by drafting one before talking to Zuckerberg about all the different aspects behind HarvardConnection/UConnect.
So what should we take away from their story?
There are a number of very good legal methods which help to fully protecting our valuable and innovative ideas. The Winklevoss Twins however failed to take the simple steps needed to protect their business model from exploitation by employee interests such those of Mark Zuckerberg.
One of the most important things we could learn from their mistakes is the fact that no matter how great, new and innovative our ideas are as well as how trusted and reliable our employees seem to be, a business should always be aware of their legal rights and how they are able to protect themselves.
If you think you would benefit from legal help when it comes to Copyright & IP law, or you would like to know how to avoid getting “Zuckerberged”, you can get in touch with us today. After you’ve finished speaking to one of our legal experts, you’ll feel much more comfortable understanding where you stand regarding this tricky legal area.