Facebook is preparing to settle with ConnectU founders Cameron Winklevoss, Tyler Winklevoss and Divya Narendra. The three allegedthat in 2003, Facebook founder and then-fellow Harvard student Mark Zuckerberg turned code he wrote for ConnectU into Facebook. All motions in the case have been terminated, the New York Times reports — a usual prelude to a settlement. In July 2007, a judge characterized the ConnectU founder's case as tissue-thin, remarking that dormroom chatter does not equate to a contract. Still, the case didn't seem to be going away. Already, inadvertently released court filings proved embarrassing to Zuckerberg, and a trial would likely have revealed worse. What the Times didn't get: the terms of the settlement.
We don't have inside information, but simple logic tells us the cleanest way to handle this is an acquisition. Buying ConnectU gives its founders a payoff, which they greatly desire, for an otherwise worthless company. For Facebook, buying ConnectU makes the issue of who owns its code moot. While Facebook's executives have been urging Zuckerberg to end the lawsuit for a while, new Facebook COO Sheryl Sandberg has to have weighed in favoring a settlement. At Google in 2004, Sandberg watched as the company handed over 2.7 million shares to settle claims that Google had infringed on Yahoo's patents. It's a history lesson that makes us wonder: After Zuckerberg rebuffed its $1 billion offer, why didn't Yahoo buy ConnectU?