Winklevii Lose Again: Have To Pay Their Lawyers $13 Million

from the synonymous-with-losing dept

The Winklevii really are working extra hard to make sure that their names are synonymous with "losers" aren't they? Having already lost in court again and again in their attempts to claim ownership of Facebook, the Winklevoss twins have now lost in their attempt to get out of having to pay their original lawyers $13 million. In case you haven't followed the story (and didn't see The Social Network), the Winklevii came to a settlement agreement with Mark Zuckerberg and Facebook, which has made them fantastically more wealthy than they already were. But they got greedy, and after the settlement was signed, tried to back out of it, claiming that they were misled in the negotiations. The courts have rejected that argument (links above), and so they also sued their lawyers, insisting that it was all their fault. It kind of makes you wonder if they have any idea how badly they're trampling on their own reputation with these lawsuits.

Filed Under: lawsuits, winklevii, winklevoss
Companies: connectu, facebook

One More Time, With Feeling: Winklevii Lose Yet Again

from the losers-many-times-over dept

Those poor Winklevii. Many people thought that the Winklevoss twins, Tyler and Cameron, along with partner Divya Narendra, had finally run out of legal options against Facebook when they realized they had no chance to appeal their rather stunning string of absolute losses in court. Instead, they'd just have to take the approximately $200 million worth of cash and stock they got in the original settlement and deal with only being fantastically more wealthy than pretty much everyone for having failed to build a compelling company or product. However, it only took a day for the Winklevii to start the process again and sue Facebook yet again in district court, under a new legal theory. However, it's taken less than a month for the court to dismiss the lawsuit entirely. Not surprisingly, it sounds as though the Winklevii will take this loss in the same spirit as every other loss, by petulantly demanding another shot at it. Guys, seriously, give it up.

Filed Under: losers, winklevoss
Companies: connectu, facebook

Winklevii Promise To Appeal To Supreme Court

from the and-the-court-will-laugh dept

Well, that didn't take long at all. We noted that the tone deaf Winklevoss twins would probably appeal their latest legal "loss," which "only" entitles them to the $160 million or so from their original settlement with Facebook and Mark Zuckerberg. Even while I said I expected them to appeal since they'd already gone this far, there was still a little voice in the back of my head saying they couldn't possibly think that the Supreme Court could see a Constitutional issue to consider in their case. And yet... hours later, the Winklevii lawyer has announced plans to appeal to the Supreme Court. And I will announce plans to not laugh out loud when the Supreme Court turns them down.

Filed Under: appeal, ideas, supreme court, winklevoss
Companies: connectu, facebook

Winklevii Lose Again: Only Choice Now Is Supreme Court Appeal... Or Accept 'Just' $160 Million

from the poor-winklevii dept

Well, this is hardly a surprise. A month ago, Judge Kozinski told the Winklevoss twins (the "Winklevii") that they couldn't back out of their settlement agreement with Facebook and Mark Zuckerberg, which was worth "only" $160 million, saying, "At some point, litigation must come to an end. That point has now been reached." However, the Winklevii apparently couldn't just take their money and cry all the way to the bank, but asked the court for an en banc hearing (basically a rehearing of the appeal with all of the judges, rather than just a panel of three). As I stated at the time, I thought it would be a surprise if the court accepted this... and that was an easy call. The court has rejected the request without comment, meaning the only thing left to do is to appeal to the Supreme Court (well, or just take their $160 million...). Given how the Winklevii have acted up until now, it wouldn't surprise me at all to see them try to take this to the Supreme Court, though I can't fathom a situation under which the Supreme Court would care. This case was over a long time ago. It's just the Winklevii who haven't realized it yet.

Filed Under: alex kozinski, appeal, en banc, ideas, winklevoss
Companies: connectu, facebook

Winkelvi Officially Ask 9th Circuit To Rehear Their Case About How $160 Million For Not Doing Much Is Not Enough

from the how-do-you-spell-greed? dept

As was widely expected, the Winklevi have decided not to listen to Judge Alex Kozinski on the 9th Circuit appeals court, who told them that the "time is now" to end their ongoing lawsuit against Facebook, and that they should just be happy with the approximately $160 million they ended up with for totally failing to compete in the market place with Zuckerberg. Frankly, even if Zuckerberg really had "copied" their idea, $160 million seems like more than ample compensation. It wasn't the Winklevoss's idea that made Facebook successful (not by a long shot). It was the specific ways in which Zuckerberg and his team executed (combined with an element of luck). In fact, with a reward so ridiculously high for failing, all this sort of lawsuit does is encourage more silly lawsuits from other competitors who failed in the marketplace.

However, despite the court and plenty of commentators telling the Winklevi to cry all the way to the bank with their money, the twins and partner Divya Narendra, have in fact filed for an en banc hearing, asking the full slate of 9th Circuit judges to rehear the case, rather than just the standard three judge panel who heard the original. To be honest, I'd be surprised if the court agreed to the rehearing, but you never know. Typically, they'll do a rehearing where there really are serious questions of law, and significant conflict in how the judges view things with the case at hand. I just don't see the specifics of this dispute rising to that level. If that fails, the only choice left will be to appeal to the Supreme Court, who we can also hope will recognize more important issues at hand and pass on hearing the case.

Filed Under: alex kozinski, appeal, en banc, ideas, winklevoss
Companies: connectu, facebook

Winklevi Won't Give Up; Appealing The Ruling That They Have To Accept 'Just' $160 Million

from the drop-it,-guys dept

Incredible. After being told to shut up and take their $160 million from Facebook, the Winklevoss twins are apparently still planning to appeal the ruling from the 9th Circuit. They're filing for an en banc hearing (basically asking all of the judges on the court to rehear the case, rather than the typical panel of three). On issues where there is some disagreement among the judges you'll see en banc hearings. Frankly, I'd be pretty surprised if the 9th Circuit is willing to rehear this case. And, at that point, their only resort will be to appeal to the Supreme Court, who I really doubt would find this a pressing matter of Constitutional importance. What's amazing to me is how much these guys seem to be hurting their own reputations here. Seriously, take the $160 million or so and move on.

Filed Under: appeal, ideas, winklevoss
Companies: connectu, facebook

Winklevoss Twins Told To Accept The Millions Facebook Has Already Given Them And To Stop Complaining

from the this-ends-now dept

Could it finally be over? The Winklevoss twins, Cameron and Tyler, along with Divya Narendra, famously sued Mark Zuckerberg, claiming he "stole" the idea of Facebook from them. They eventually sued him and then settled, getting (at the time) $65 million in cash and Facebook stock. You may have heard about it, considering there was a big Hollywood movie based loosely on all of this. Of course, the whole concept was preposterous. There were tons of other social networks at the time, and you can't "steal" an idea. But, in the grand scheme of things, paying off those guys was easier than continuing to fight it. Yet, after the settlement was done, the twins tried to back out of the settlement, claiming their share should have been much higher. Despite a court shutting them down, the twins kept fighting. Hopefully, that's now over. Judge Alex Kozinski is is trying to put an end to the whole thing, saying that the original settlement stands.

The full ruling from Kozinski is, in typical Kozinski fashion, an entertaining read. He points out that the point of the original settlement was so that everyone could "get on with their lives." Kozinski is particularly harsh on the Winklevosses for trying to back out of the agreement over a claim of valuation issues when they clearly knew what they were getting into:

The Winklevosses are sophisticated parties who were locked in a contentious struggle over ownership rights in one of the world’s fastest-growing companies. They engaged in discovery, which gave them access to a good deal of information about their opponents. They brought half-a-dozen lawyers to the mediation. Howard Winklevoss--father of Cameron and Tyler, former accounting professor at Wharton School of Business and an expert in valuation--also participated.

Kozinski also knocks the Winklevi for being marketplace losers resorting to the courts to sue those who beat them in the market:

The Winklevosses are not the first parties bested by a competitor who then seek to gain through litigation what they were unable to achieve in the marketplace. And the courts might have obliged, had the Winklevosses not settled their dispute and signed a release of all claims against Facebook. With the help of a team of lawyers and a financial advisor, they made a deal that appears quite favorable in light of recent market activity.

As Kozinski notes, while they've been arguing about all of this, Facebook has continued to appreciate in value, and their "settlement" is now worth much more than they even thought they would get originally. He concludes it simply:

For whatever reason, they now want to back out. Like the district court, we see no basis for allowing them to do so. At some point, litigation must come to an end. That point has now been reached.

And so, they "lose." Of course, it's hard to see how getting $160 million for totally failing in the marketplace can be considered "losing."

Filed Under: alex kozinski, ideas, winklevoss
Companies: connectu, facebook

Winklevoss Twins Still Trying To Get More Of Facebook

from the oh-come-on dept

There have been a whole series of claims from others that they had the "original idea" for Facebook, but as we've explained over and over again, the idea part was pretty meaningless. There were plenty of other, competing social networks at the time Facebook was founded. What made Facebook a success was not the original idea, but how the company executed and changed (quite a lot) over time, adapting to the market. And, yet, the lawsuits continue. The most famous, of course, was the one filed by the Winklevoss twins, which is at the heart of the recent fictionalized movie about Facebook. As we covered here, the twins sued, claiming that Zuckerberg took the idea from them and their company ConnectU. Over the years, more evidence has come out that suggests Zuckerberg may have been kind of slimey in dealing with the twins, but it still didn't suggest that the twins actually deserved any part of Facebook. Even so, in 2008 (as is covered in the movie), the company settled the lawsuit, and dumped stock worth tens of millions on the twins... for not doing anything.

Given all that, we were amazed later that year when the twins sought to back out of the settlement, in what appears to be a clear case of "settlers' remorse." Joe Mullin has the latest on the twins' attempt to go through this whole thing all over again, and notes how ridiculous the whole situation is:

What makes CU's drawn-out litigation all the more remarkable is that Facebook has to be one of the most patently "unstealable" ideas out there. Facebook wasn't the first internet social network and, at the time of the suit, wasn't profoundly different than those that came before it. Facebook's success isn't due to the idea of a social network, but the skillful execution of that idea--combined, of course, with some hard work and some very lucky timing.

As Mullin points out, however, these kinds of cases have increased in recent years, as the culture and legal framework we've created, that overvalues ideas and undervalues execution, leads people to think that just because they had an idea -- even if they had nothing to do with the execution -- they deserve a cut from those who did execute. While we've already posted this before, now seems like a perfect time to repost the recent recent xkcd comic on this concept:

Filed Under: execution, ideas, ownership, winklevoss
Companies: connectu, facebook

Why Losers Litigate: It's Profitable!

from the sue-for-profitability dept

Economics is all about incentives -- and when you create incentives for bad activity, you can rest assured that you're going to get more bad activity. This has become especially troubling with respect to the belief that (a) ideas are more important than execution and (b) that you can "own" ideas. You cannot own ideas -- and even though, technically, intellectual property isn't supposed to let you own ideas, in many cases it's created either scenarios where that is what's happened -- or where enough people believe it's true that you can insist that ideas aren't ownable, but you'll still have a costly legal bill to pay.

So what does that have to do with incentives?

Well, we keep seeing scenarios where winners innovate, but losers litigate. That's because the market "losers" claim that they had the "idea" that allowed the winners to innovate and succeed in the market. But, of course, that overvalues the idea and greatly undervalues the actual execution. Anyone who's built a successful business recognizes that it's the process and execution that leads to success -- not the idea. But, with courts all too often rewarding the losers, it's simply too lucrative for marketplace losers not to sue.

In one such case, it seemed absolutely ridiculous that the founders of a competing social network, ConnectU that had briefly employed Mark Zuckerberg before he founded Facebook was suing him for "stealing" their idea. ConnectU had been a massive failure in the marketplace, while obviously Facebook has been much more successful. But, of course, the "idea" part was rather meaningless. There were already a bunch of similar social networks out there when both ConnectU and Facebook were getting started. Yet, rather than avoid a drawn out legal battle, Facebook eventually just agreed to settle -- though with the demands that the terms of the settlement remain confidential.

That worked... briefly. It turns out that the lawyers for ConnectU couldn't resist bragging, and accidentally advertised that they had won $65 million from Facebook. The number is not really accurate -- as the settlement was a mixture of cash and equity (whose value is really anybody's guess). However, it does show you why losers litigate so often. Imagine being handed millions for failing in the marketplace? Why wouldn't you litigate? But, if you believe in basic free market capitalism, you should recognize how this is rewarding exactly the wrong behavior. It punishes those who best served the market, and rewards those who couldn't serve the market.

Filed Under: execution, ideas, innovation
Companies: connectu, facebook

ConnectU Wants Out Of Its Settlement With Facebook; Wants To Sue Again

from the oh-come-on dept

Earlier this year, we were disappointed to see Facebook agree to settle with ConnectU. ConnectU was another wannabe social network that Mark Zuckerberg worked for briefly before going off to found Facebook. The brothers behind ConnectU were unsuccessful in doing much with ConnectU, but it wasn't because Zuckerberg "stole their idea." It was because he executed much better. The "idea" itself was hardly novel at the time, as there were already a number of social networks out there. While it may have made economic sense in the short term for Facebook to settle with ConnectU (just to get the lawsuit hassle out of the way), that sort of settlement leads to more people claiming credit for something they have no real rights over.

Yet, if you thought the case was now over, you'd be wrong. Apparently the brothers behind ConnectU suddenly claim that they've come up with a "smoking gun" and they want to cancel the settlement and get back to the lawsuit. This is clearly a pure moneygrab at this point. Even if the brothers could prove that every bit of Facebook is based on code that Zuckerberg directly copied from ConnectU, it wouldn't change the reality of the situation -- which was that Zuckerberg created a service people wanted to use, and the ConnectU guys did not. They're basically demanding money to pay for their own failure to execute well. In this society, we want to reward the winners in the marketplace, not the losers.

Filed Under: harvard, ideas, lawsuits, social networks
Companies: connectu, facebook