Marketing Pilgrim's "Legal" Channel

Sponsor Marketing Pilgrim's Legal Channel today! Get in front of some of the most influential readers in the Internet and social media marketing industry. Contact us today!

Facebook to Settle with ConnectU




As with most legal battles, the ConnectU suit against Facebook has begun to drag out: first filed in September 2004, the legal battle over who originally created the source code for Facebook is still ongoing. Last July, a Massachusetts Federal judge ruled that ConnectU needed concrete evidence to bring their suit. It looked like the suit would die after the ruling stated that “claims must have a factual basis.”

But that’s not how our wonderful legal system works in the United States. The suit was once again opened after a circuit court judge granted ConnectU the right to file an appeal last Thursday. CNET reports:

“We hold that the jurisdictional claim in the amended complaint warrants full consideration and constitutes a viable hook on which federal jurisdiction can be hung,” the court document read. “Because this holding is at odds with the conclusions reached by the court below, we reverse the order of dismissal and remand for further proceedings consistent with this opinion.”

Today, the New York Times Bits blog reported that Facebook and ConnectU reached a settlement for an undisclosed amount. Additionally, “the person briefed on the status of the negotiations said motions to dismiss the cases were expected to be filed ‘within weeks.'”

Despite the fact that the case has essentially been reopened, it’s not entirely clear why Facebook would choose to make a deal now, after three and a half years of the lawsuit. Why do you think Facebook chose to do this now?

  • http://www.gadgets4nowt.co.uk PS3

    If you had to guess Jordan, what would you say the “undisclosed amount” is likely to be, talking ball-park figures?

    Our legal system here in the UK is not much better by the way!

  • http://www.burgoblog.com Burgo

    “Why do you think Facebook chose to do this now?”

    I think NY Times probably were close to the money on this one, when they said:

    “Facebook clearly needed to make the suit go away before a widely expected initial public offering that could come as early as next year.”

  • http://capitolvalley.net Andrew Feinberg

    I wrote about this months ago. The suit itself was complete and total extortion-by-judge. It was even dismissed, as you said, for having “no factual basis.”

    The two “founders” of ConnectU have some interesting history, and awful business sense considering their family lineage. Here is my article, along with citations from the court documents and sworn statements:
    http://www.capitolvalley.net/2008/03/rich-crybabies-to-get-their-da.html

  • http://largeorangepop.com/blog Feydakin

    I’d have to agree with Burgo. These types of things tend to be about removing dragon the company, no matter how small, to make it ready for something larger.. Even after all this time people would be less likely to invest in a company like Facebook if it had a suit like this hiding in the closet..

  • http://www.blue2005.com Dave

    No one wants a suit hanging over their heads during an IPO. The settlement might hurt in the short term (pride mostly-they have the cash) but in the long run something like this might have really cost them (remember RIM and their lawsuit problems-dragged for years-and they still paid).

  • http://chasinggoogle.blogspot.com Elections guy

    It’s time to completely rewrite Facebook.

  • http://www.capatrex.com Alex Isaacs

    I guess that’s part of the problem. I don’t really know jack about law, but it appears that since our laws are “interpreted” by a judge it really boils down to shoppping it around till ya find one that sides with ya. ConnectU probably had some minisucule input, and expects a partnering stake. Just greed floating to the surface

  • http://beyondbeautybasics.com Paul Baranda

    I thought this suit was over. Facebook chose to do this now to keep the positive spotlight on them before the public offering. However, ConnectU is just trying to ride Facebook’s fame and will continue to drag this issue for all it’s worth.

  • http://www.imtemplates.com Minisite templates

    I think burgo is right on the money with this one – Facebook obviously wanted to make this go away before their public offering. Do we know when that will be?