Facebook and ConnectU have been going through an incredibly futile legal over the last few years. The classic scenario: ConnectU’s founders claim that Facebook CEO Mark Zuckerberg stole their idea and turned it into “The Facebook” in 2004.
Hat-tip to Valleywag’s Owen Thomas for nailing this situation. HIs facts are clear and there’s no fluff. In a nutshell, ConnectU’s founders come from a large pile of money, have the funds to keep this case going, and out of the $65 Million they’ve one, have about $2.7 million left. Ouch.
Valleywag: Lawyers for ConnectU are bragging about winning a $65 million settlement for their clients from Facebook. But what did Divya Narendra and Cameron and Tyler Winklevoss really get from Mark Zuckerberg? Almost nothing.
The Winklevosses and Narendra, Harvard classmates of Zuckerberg, sued him after he launched Facebook, claiming he had done work for their project and then stolen code from it to start Facebook. They reached a settlement last summer in which Facebook agreed to acquire ConnectU for cash and stock — $20 million in cash and 1.25 million shares of Facebook. But then they fired their former lawyers, Quinn Emanuel, amid a contest over legal fees, the value of the settelement, and new evidence they said they’d discovered.
Based on the price Microsoft paid for its 1.6 percent stake in Facebook in the fall of 2007, the stock component of that settlement was worth $45 million. Quinn Emanuel is seeking $13 million in a contingency fee — 20 percent of the total take, which is $65 million as far as ConnectU’s former lawyers are concerned.
But the appraised value of the stock last summer was far less — $11 million, based on a valuation Facebook sought for its own stock-option plan. That’s $34 million of $65 million gone.