Slippery Idea Ownership: Get It In Writing 0

If you follow the Web you’ve probably seen coverage of a small unsuccessful company claiming that Facebook founder Mark Zuckerberg stole the idea from two brothers who were associated with him when he started. Mark Zuckerberg

This is important to you not for who is right or wrong, or for what’s fair, but for what a great example it is of how slippery idea ownership really is. I admit this has become a theme of mine because I deal with so many would-be entrepreneurs who think their ideas are worth something. Sure, but with odds of one in a million maybe, probably less than that. Ideas are a dime a dozen. The only way you own an idea is to build something on top of it.

The New York Times recently headlined the story as Who Owns the Concept if No One Signs the Papers? Here are some quotes from that:

WHO owns a bright idea? If the technology associated with an idea is new and the opportunities it offers are valuable, it will have many authors — most of whom may argue over ownership.

Here are the facts that are not disputed: In 2002, when the Winklevoss brothers were juniors at Harvard, they conceived what was initially called the HarvardConnection, which was to be a social network for the college. In November 2003, they asked Mr. Zuckerberg, who was studying computer science at Harvard, to develop the site’s software and database, promising to compensate him later if the venture prospered.

Mr. Zuckerberg abandoned the project in February 2004, a month after registering the domain name thefacebook.com. By the end of that February, his new site, also a social network for Harvard, had registered half the college’s undergraduates. By April 2004, it had spread to other Ivy League schools.

Very quickly, thefacebook expanded to serve other universities, then high schools, then organizations as varied as McDonald’s and the Marine Corps, and finally the general public. By contrast, ConnectU never really got started: it didn’t open until May 2004, and, overshadowed by what became, simply, Facebook, today it has no more than 70,000 registered users.

The Winklevoss brothers and Divya Narenda, another ConnectU founder, contend that Facebook’s founder stole the idea from them. In a suit filed in 2004, the ConnectU founders accused Mr. Zuckerberg of lifting their site’s source code and business plan when he worked for ConnectU as an unpaid programmer. They are asking that Facebook’s assets be transferred to them.

In writing about this, I don’t want to debate facts or legal issues, no more than you want to read about them. In any case, I’m not the one and this isn’t the place. I am going to assume that the code Zuckerberg used didn’t formally belong to ConnectU, because there is protection — copyright — on computer programming. Let’s just call that a simplifying assumption, so I can make a different point here.

This is a perfect example of what happens with ideas. Whether they realized it or not, the three others lost a race to the guy who got out there in the market and made things happen. And that’s what you’re facing as you jockey for position with new ideas and startup companies, and the friends or partners or associates you talk to. It happens all the time, I gather, because I get a steady flow of emails about things like this. One person gets up off the table and leaves the bar and builds the business that he or she and the others were talking about. The others are mad, but then what counts is the doing, not the talking about it.

Notice the Times‘ headline, emphasizing the need to get some papers signed. It’s so important, I can’t overemphasize. Don’t just talk about it, don’t just work on it, but sit down together and hash it out and write it down.

It’s so much easier before there’s a business, before there’s money at stake. It’s a huge difference to consider fair shares and shared ownership and divisions and roles to play and who owns what before there’s money at stake. Visions are so much clearer in the beginning.

Writing it down is light years better than not writing it down, but better still is to take it to a reasonably priced, reasonably experienced, business attorney. If you don’t know anybody, find somebody anyhow, because these early papers are worth their weight in gold. People lose not just businesses but friends, spouses, even families over understandings about business ownership that were never written down.

More details from the Times:

When disputes over the provenance of an idea become particularly turbid, disappointed entrepreneurs will look to the courts, which often are of little help. As Lawrence Lessig, a professor at Stanford Law School, said, “The general rule is that ideas are free unless strapped down by contract or patent.” In practice, a great idea is owned by whoever expresses that idea most successfully.

Who is in the right? Judge Douglas P. Woodlock of United States District Court in Boston, who is considering a motion by Facebook to dismiss ConnectU’s suit, might agree with Mr. Zuckerberg. At a hearing on July 25, he scolded John F. Hornick, ConnectU’s lawyer, over what the judge saw as his inability to provide documentary evidence, saying, “Dorm-room chitchat does not make a contract.”

Many may sympathize with the Winklevoss twins. But in the absence of any formal contract, the twins are, in effect, arguing that they have rights to Mr. Zuckerberg’s imagination and experiences. In my book, that would be a constraint on the free marketplace of ideas.

This story is in the news because Facebook, which is privately owned and has never been traded, is supposed by knowledgeable analysts to be worth $9 billion or so, maybe more. But it’s not just the high-tech glamour companies that have this problem. It happens all the time, with so many startups. I hate to see it. It’s a waste.

- Tim

About the Author Tim Berry is the founder of Palo Alto Software and Bplans.com. Follow him on Twitter @Timberry. Follow Tim on Google+ Read more »

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