Legal Lessons From Facebook Law Essay Research Paper

Legal Lessons from Facebook
Name
Institution Affiliation
Legal Lessons from Facebook
Background
A concept was generated by three Harvard University students to create a social networking website in 2003. The three; Divya Narendra, Cameron Winklevoss, and Tyler Winklevoss aimed to reach out to Ivy League university students with their idea (Bhagwat & Goutam, 2013). To have the project developed, they engaged the services of a sophomore programmer to build the code for the networking website, which they called ConnectU. Instead of this gentleman acting in confidentiality, he got the idea and embarked on creating his own website using their prototype. The gentleman called Mark Zuckerberg named the site Facebook. The new project became an instant hit with many university students registering on it and through its popularity it soon opened up to the general public, becoming a multimillion conglomerate called Facebook.
The Lawsuit Review
On the 28th of March 2007, ConnectU Inc. launched a lawsuit against Facebook Inc. The contents of the civil action cited contractual breach, infringement on copyright, trade secrets misuse, fiduciary duty violation, undeserved enrichment, poor business practices, interference with prospective business advantage, and contravention of duty of good faith, fair dealing, confidence, and fraud (Easterbrook & Fischel, 1993).
The Plaintiff were classmates at the Harvard University class of 2004 and in December 2002, they hatched an idea to develop a social network that would be used by students and alumni of a university or college to create a platform for inquiries on job opportunities and employment prospects, information exchange, an online directory as well as a dating site. The initial plan was to serve the Harvard community but would be expanded to other institutions later. Its business model was anchored on advertisement revenue and had good financial success prospects given its target niche was university students and the educated cadre, who form an important segment for advertisers.
The defendants included Facebook Inc., Zuckerberg, Hughes, McCollum, and Moskovitz or simply Facebook, concurred that ConnectU formed the company with a view to found a business and make a profit and proceeded to engage Zuckerberg to design a program for software and data definitions for their website. They admitted that Zuckerberg was entrusted with the code belonging to Harvard Connections in its original form as at late 2003 for project compilation and an agreement was made that the project had timelines to meet before its launch to the market. He was trusted and briefed on the project status, and given the website idea, including the code, the design and the user interface that had been created already, business prototype, functionality, content and even the kind of information needed from users. These were proprietary and confidential trade secrets and it was Zuckerberg’s obligation to ensure confidentiality and adherence to set timelines to be able to launch the website before schools closed.
The defendants agreed to the need to meet the deadlines owing to the first mover advantage concept regarding technology ventures where the first entity to enter the market gains substantial benefit over their competition. The ConnectU team asked Zuckerberg to be part of the HC site development team in return for beneficial interest including revenue and other proceeds from the website and he agreed. However he later rescinded his decision to work with the team citing time demands and non commitment from the ConnectU side, despite agreeing to code and finalize the website, his right to use access confidential information and procedures, as well as participate in the development team. He also agreed to gain financially from the venture profit and share proceeds.
Zuckerberg’s withdrawal from the project was in bad faith, and breached trust, fair dealing and negated relationship and fiduciary trust between himself and ConnectU. He registered a domain without the knowledge of ConnectU and proceeded to launch it within a week. The plaintiff alleged that Zuckerberg used the Harvard Connection’s code to develop Facebook and gained from it (Newkirk & Viehauser, 2008). They further alleged that the Facebook website was developed over time, from as early as December 22nd, 2003 and Zuckerberg never informed them that he had stopped working on their project and were surprised when he launched a competing website while at the same time working as a member of the project team for HC.
The plaintiff was forced to hire a programmer to complete the project and it was launched later in May 2004. The defendants used information and procedures of HC to create, launch and run the Facebook website. The defendants’ unlawful acquaintance to the information and procedures enabled them to penetrate the market first thereby gaining media coverage, and investors that otherwise would have been the plaintiff’s and thereby occasioning them losses. The plaintiff also alleged that the defendant usurped their potential market by gaining a market advantage and sought damages to intellectual property rights and other rights and claimed to recover damages for past, present and future violations.
Claims for Relief
The plaintiff claimed that the defendants copied copyrighted code belonging to Harvard Connection and knowingly created unauthorized capital gain out of it, an outright infringement on their copyrights to which Zuckerberg never made any copyrightable contributions, occasioning monetary damage. The plaintiff took measures to secure their information and procedures and in the process expended considerable time and money in both their development and security. The information was not easily accessible by outsiders and the actions of the defendant ...