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ConnectU Sued for Slice of $65M Facebook Deal

By Sheri Qualters
January 29, 2010

A Boston software developer is suing the now-defunct social media site ConnectU, its founders, its law firm, Washington-based Finnegan, Henderson, Farabow, Garrett & Dunner, and Scott Mosko, a Palo Alto, CA, partner at the firm, for allegedly cutting him out of Facebook's $65 million settlement with ConnectU's founders.

Software developer Wayne Chang and his company, The i2hub Organization, are suing ConnectU Inc., co-founders Cameron and Tyler Winklevoss and directors and shareholders Howard Winklevoss and Divya Narendra in Suffolk County Superior Court in Massachusetts.

According to the lawsuit, Chang and ConnectU entered into a memorandum of understanding that gave Chang a 15% share of ConnectU for integrating i2hub's peer-to-peer file-sharing software and ConnectU's Web site. Chang also claimed that he and the Winklevosses formed the Winklevoss Chang Group partnership to co-own and operate ConnectU, i2hub and other Internet projects. Chang claims his 50% interest in the Winklevoss-Chang partnership means half of the proceeds of ConnectU's sale belong to him.

Chang's lawsuit states two different claims on the settlement. He first claims the Winklevoss Chang partnership agreement entitles him to half. Alternatively, if he isn't entitled to a 50% cut, he asserts that the memorandum of understanding means he's owed a 15% cut.

The Chang v. Winklevoss was filed on Dec. 21 2009.

Chang's complaint states that ConnectU's 2004 District of Massachusetts lawsuit against Facebook founder Mark Zuckerberg was already in progress when he started working with ConnectU. That federal case claimed that Zuckerberg misappropriated ConnectU's computer code. In 2005, Facebook sued ConnectU, the Winklevosses, Chang and others in California state court for allegedly misappropriating Facebook's proprietary information. That case was removed to the Northern District of California, and claims against Chang were dismissed before the settlement. Finnegan Henderson represented ConnectU and the Winklevosses in both cases and Chang only in the California case.

Chang's claims against Finnegan Henderson and Mosko include professional negligence, civil conspiracy, aiding and abetting and interference with advantageous business relationships.

The claims against the ConnectU defendants include, conversion, unjust enrichment, breach of contract, breach of partnership, breach of the covenant of good faith and fair dealing and breach of fiduciary duty.

Chang's lawyers at Boston-based Rose, Chinitz & Rose issued a statement asserting that the Facebook/ConnectU litigation was settled “without Chang's knowledge of the terms. ' That settlement benefited the Winklevosses ' not Chang.” The statement continues: “Through this litigation, Chang asserts his ownership interest in The Winklevoss Chang Group and ConnectU, including the settlement proceeds.”

Through their attorneys at Boies, Schiller & Flexner, Tyler and Cameron Winklevoss and Divya Narendra also declined to comment.

According to a marketing brochure from ConnectU's former law firm, Quinn Emanuel Urquhart Oliver & Hedges, Facebook paid ConnectU's founders $65 million to settle the lawsuit accusing Zuckerberg of stealing the company's ideas.

Sheri Qualters is a Staff Reprter for the National Law Journal, an ALM affiliate of Internet Law & Strategy.

A Boston software developer is suing the now-defunct social media site ConnectU, its founders, its law firm, Washington-based Finnegan, Henderson, Farabow, Garrett & Dunner, and Scott Mosko, a Palo Alto, CA, partner at the firm, for allegedly cutting him out of Facebook's $65 million settlement with ConnectU's founders.

Software developer Wayne Chang and his company, The i2hub Organization, are suing ConnectU Inc., co-founders Cameron and Tyler Winklevoss and directors and shareholders Howard Winklevoss and Divya Narendra in Suffolk County Superior Court in Massachusetts.

According to the lawsuit, Chang and ConnectU entered into a memorandum of understanding that gave Chang a 15% share of ConnectU for integrating i2hub's peer-to-peer file-sharing software and ConnectU's Web site. Chang also claimed that he and the Winklevosses formed the Winklevoss Chang Group partnership to co-own and operate ConnectU, i2hub and other Internet projects. Chang claims his 50% interest in the Winklevoss-Chang partnership means half of the proceeds of ConnectU's sale belong to him.

Chang's lawsuit states two different claims on the settlement. He first claims the Winklevoss Chang partnership agreement entitles him to half. Alternatively, if he isn't entitled to a 50% cut, he asserts that the memorandum of understanding means he's owed a 15% cut.

The Chang v. Winklevoss was filed on Dec. 21 2009.

Chang's complaint states that ConnectU's 2004 District of Massachusetts lawsuit against Facebook founder Mark Zuckerberg was already in progress when he started working with ConnectU. That federal case claimed that Zuckerberg misappropriated ConnectU's computer code. In 2005, Facebook sued ConnectU, the Winklevosses, Chang and others in California state court for allegedly misappropriating Facebook's proprietary information. That case was removed to the Northern District of California, and claims against Chang were dismissed before the settlement. Finnegan Henderson represented ConnectU and the Winklevosses in both cases and Chang only in the California case.

Chang's claims against Finnegan Henderson and Mosko include professional negligence, civil conspiracy, aiding and abetting and interference with advantageous business relationships.

The claims against the ConnectU defendants include, conversion, unjust enrichment, breach of contract, breach of partnership, breach of the covenant of good faith and fair dealing and breach of fiduciary duty.

Chang's lawyers at Boston-based Rose, Chinitz & Rose issued a statement asserting that the Facebook/ConnectU litigation was settled “without Chang's knowledge of the terms. ' That settlement benefited the Winklevosses ' not Chang.” The statement continues: “Through this litigation, Chang asserts his ownership interest in The Winklevoss Chang Group and ConnectU, including the settlement proceeds.”

Through their attorneys at Boies, Schiller & Flexner, Tyler and Cameron Winklevoss and Divya Narendra also declined to comment.

According to a marketing brochure from ConnectU's former law firm, Quinn Emanuel Urquhart Oliver & Hedges, Facebook paid ConnectU's founders $65 million to settle the lawsuit accusing Zuckerberg of stealing the company's ideas.

Sheri Qualters is a Staff Reprter for the National Law Journal, an ALM affiliate of Internet Law & Strategy.

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