Two of the true heavyweights of the tech world, Microsoft founder Bill Gates and Facebook founder Mark Zuckerberg, are facing bitter legal battles with former associates who claimed to have been duped by the pair.
Gates’ fight relates to a start up company called Infoflows, run by former Microsoft employee Steve Stone.
In the late 1990s, Stone left Microsoft to start his own company, which focuses on providing the owners of photographs and videos a way to track the usage of their images and protect their copyright.
Infoflows eventually started talking about developments with Corbis, a big photo library and licensing company owned by Bill Gates and in June 2006 the two companies did a deal.
But four months later, the deal fell apart and a bitter legal battle ensued, with Infoflows suing Corbis for fraud, breach of contract, breach of the duty of good faith and fair dealing, unjust enrichment and trade secret misappropriation.
Earlier this week, Infoflows announced that a court in Washington State had handed down its final judgement in the case, finding Corbis liable on two counts of fraud and for misappropriating Infoflows’ trade secrets, breaching its contract obligations and acting in bad faith.
The jury originally awarded Infoflows $US36 million in damages, but this was later reduced to $US20 million in the final judgement.
Corbis has said it is disappointed with the judgement and is appealing. It has also tried to distance Gates from the case, claiming he was only present at one meeting between the two companies.
However, Steve Stone has taken the David and Goliath battle much more seriously.
“We thought we were working with friends,” he told Seattle radio station.
“When we discovered they had improperly taken [the information], stabbed in the back is a perfect way of looking at it.”
“To have a Bill Gates company basically claim that you stole their idea when in fact it was yours is just a horrible feeling. I just can’t begin to explain it.”
Over at Facebook, celebrations over hitting 500 million users have been tempered by a legal claim from a New York wood fuel salesman Paul Ceglia, who claims he owns 84% of Facebook as a result of a contract he signed with Zuckerberg back in 2003.
Ceglia claims that he employed a then 18-year-old Zuckerberg in 2003 to help build a photo database for insurers called StreetFax.
Ceglia claims Zuckerberg told him about a social networking project he was working on – which would later become Facebook – and asked Ceglia to invest $US1000. In return, Ceglia claims he signed a contract entitling him to 84% of Facebook.
Facebook has challenged the validity of the contract and is trying to have the case thrown out, although the company’s lawyers concede Zuckerbeg did work for Ceglia.
The case is continuing.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
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