Earlier this week, CNBC asked me to come on the air to discuss Facebook's legal woes. Click to viewI've spent days immersed in legal filings, and the clip, above, just scratches the surface of what I've learned. Next week comes a critical moment for Facebook, the red-hot social network that has captured Silicon Valley's imagination, and its founder and CEO, Mark Zuckerberg. After the jump, I explain why Zuckerberg will face a moment of reckoning next Wednesday, July 25, and detail a timeline of Facebook's legal battles.
In November 2003, as a student at Harvard University, Zuckerberg fell in with three classmates who were working on a new idea: ConnectU, a set of interlinked social networks for people at a single college. Zuckerberg did some work for them, but then launched his own website — what's now known as Facebook. The result: A lawsuit that just won't end. Next Wednesday, in a Boston courtroom, Zuckerberg's lawyers have their best shot at making it go away for good, at a hearing on a motion to dismiss the lawsuit.
Legal experts say that Zuckerberg's best shot is to get the suit dismissed on a technicality, by making a claim that the statute of limitations ran out on his opponents' charges on February 4, 2007, three years after Zuckerberg first launched Facebook.
That's a tough one, but more likely than the alternative, which is getting it dismissed on the substance of the case. One lawyer described ConnectU's charges as "squishy," which sounds bad — but in a hearing on a motion to dismiss, squishy is actually a good thing. If there's any doubt on whether a claim is valid, in such a hearing, the judge's inclination will be to let it go forward to trial. And a trial, with all its uncertainty, is the last thing Zuckerberg needs, with his stated plans to keep Facebook independent and apparent goal to pursue an IPO.
It all comes down to timing, then. With that, here's how Zuckerberg got into this legal spot. Anything missing? Let me know in the comments, and I'll update it.
May 2003: Mavinkurve graduates from Harvard, with the site still unfinished; Victor Gao, another Harvard student, later picks up work on the site
November 2003: After Gao leaves the project, ConnectU's founders hire Mark Zuckerberg to work on Harvard Connection, a website that later became ConnectU
January 11, 2004: While still promising to finish Harvard Connection, Zuckerberg registers the domain for thefacebook.com, a fact that the ConnectU founders allege that didn't disclose in a meeting three days later
February 4, 2004: Zuckerberg launches thefacebook.com
April 2004: Facebook expands to other colleges
May 2004: Cameron Winklevoss allegedly emails his father detailing a plan to steal email addresses from Facebook's website
May 2004: Having appealed to Harvard administrators, without success, to rule that Zuckerberg violated the school's honor code, ConnectU's founders appeal to Harvard president Larry Summers, who also rebuffs them
May 21, 2004: ConnectU launches its first website, Harvard Connection
June 11, 2004: ConnectU's founders allegedly ask iMarc to write a script that automatically logs into the Facebook website and harvests users' email addresses; iMarc refuses
July 22, 2004: ConnectU's founders allegedly send thousands of emails to Facebook users inviting them to join ConnectU
September 2, 2004: ConnectU files a lawsuit against Zuckerberg and other Facebook founders
February 2005: Facebook blocks ConnectU's alleged continued attempts to harvest emails from its website
August 23, 2005: Facebook, at bad-boy entrepreneur Sean Parker's instigation, buys the facebook.com domain name for $200,000
October 14, 2005: Facebook's founders file a motion to dismiss ConnectU's lawsuit
September 11, 2006: Facebook allows any user with an email address to join the site, and its user base begins to grow explosively
June 23, 2007: Court grants a hearing on a motion to dismiss ConnectU's lawsuit against Facebook, scheduled for July 25