Settlement with ConnectU cost Facebook $65 million

Mark Zuckerberg has seen better days. (Credit: leafar via Flickr)

Thanks to a slip-up by the law firm that helped ConnectU sue Facebook in 2004, we now know how much the lengthy litigation cost CEO Mark Zuckerberg and Co. It wasn't cheap.

Quinn Emanuel Urquhart Oliver & Hedges represented ConnectU, a social networking site, in its case claiming that Zuckerberg stole its ideas in creating Facebook. The details of the settlement were supposed to be confidential, but the firm released a newsletter stating that the case had netted its clients -- twin brothers Tyler and Cameron Winklevoss, who started ConnectU -- $65 million in cash and stock options.

Legal publication The Recorder got the scoop and posted the newsletter (PDF), which lists its recent court victories above the tagline: "It's Our Opponents Who Needed a Bailout."

The amount is certainly no drop in the bucket, even for a start-up that was once upon a time valued at $15 billion after a Microsoft advertising and investment deal in 2007.

Of course, unless Quinn lets slip again, there's no way to know how much of the settlement was paid in cash versus Facebook stock.

The law firm's printing of the settlement amount in the pamphlet was an obvious mistake, as the two companies settled under a confidentiality agreement.

This high-profile episode is unlikely to make it into the firm's next marketing brochure.

-- Mark Milian

Comments

[Ian Hendry]

So they breached a confidentiality agreement? Can we expect action back from Facebook to recoup some of those costs then...?

Worth noting that any stock options would have been valued at the time. Who knows whether they have gone up by now (Facebook has more than doubled its membership since then) or gone down, but they will have a different value now, that's for sure.

Ian Hendry
CEO, WeCanDo.BIZ
http://www.wecando.biz

[Sanjay Dalal]

My company sells Faculty eBook at the domains: http://facebook.org.uk, http://www.facebook.tw and http://www.facebook.fm to mention a few. Now, Facebook is pushing for legal actions saying that my company cannot sell at these sites (although we paid for these domains and websites), and that we immediately need to give them the domain names without any due process. Is this allowed? Can Facebook do this?