David Fincher’s new film, The Social Network, could be subtitled “The Unauthorized Biography of a Startup.” Based on the book ‘The Accidental Billionaires’ by Ben Mezrich, The Social Network tells the story of Facebook’s founding and rise to fame through the lens of the lawsuits that arose around it almost from the beginning.

While critics contend that the movie is as much fiction as truth, it’s based on an all-too-typical scenario: business founders get started without a clear understanding of the legal implications of partnerships, intellectual property, and non-compete agreements, and are then surprised when complications arise.

Whether or not you’ve seen The Social Network yet, we found some great lessons any startup should take away from the movie.

Business ideas aren’t protected
Central to the storyline of the film is a misunderstanding about what constitutes intellectual property.

The facts: In late 2003, Cameron and Tyler Winklevoss and Divya Narendr asked fellow Harvard student Mark Zuckerberg, already known as a genius programmer, to write some code for a social networking site for students. Their oral agreement with Zuckerberg later created disputes as to whether they hired him, contracted with him for a portion of the profits, or what, but Zuckerberg admits to doing about 6 hours of work for them on the project, and claims he never committed to completing the project, but just that he was “helping out” some fellow students. At some point, he stopped answering their emails and in February 2004 launched his own social networking site, “Thefacebook.”

The basis of the resulting lawsuit was that Zuckerberg had “stolen their idea” and used it for his own profit.

But, as our own Tim Berry points out, “Business ideas aren’t protected. In 30 years of business and consulting, I’ve never heard of any laws to protect business ideas. Laws protect inventions with patents, creative works with copyright, and trade names with trademarks.”

If they had alleged instead that he had stolen their original code, that would be protected by copyright, so long as:

• they, and not Zuckerberg, had actually created the code, or
• they had an enforceable contract with Zuckerberg as an employee or contractor that gave them rights to anything he created while in their employ.

Alternatively, if they had made Zuckerberg sign a non-compete agreement before beginning work, in which he agreed not to create his own social networking site, or not to do related work for a certain period of time, they would have had a legal basis for the lawsuit.

Spoiler alert:
On Monday, we’ll talk about partnership agreements, and how they could have saved Eduardo Saverin and the Winklevoss twins a lot of time in court.

Sara Prentice Manela
Editor

P.S. Speaking of Facebook – Have you joined our fanpage?

It’s always difficult to keep an upbeat view during hard times, and to remember that there are always opportunities for those who look close enough. Still, without those doggedly incurable optimists, we would still be plodding along without the benefits of some iconic inventions.

A list of Recession Inventions: Success Stories in Bad Times, was posted last Monday on mainstreet.com.

Chocolate Chip Cookies — 1930
Fortune magazine — 1930
Basketball — 1891
Miracle Whip — premiered nationally 1933
Monopoly board game — the early 1930s
Transparent adhesive tape — 1930
Coors Brewery — opened 1873
iPod — 2001
Ketchup — 1876
Compact fluorescent light bulbs — 1970s
Twinkies — 1930
Photocopiers — 1937
Diet Coke — 1982

The LA Times posted a similarly-themed list in their Some inventions born amid recession recently. So did ABC News Eureka! Recession Sparks Inventive Spirit while this BusinessWeek article, 20 Most Import Inventions of the Next 10 Years looks at Innovation from Recession.

So even in a bear market, grab the bull by the horns and pursue your dreams of innovation.

Steve Lange
Palo Alto Software

Take five minutes to list all the uses you can think of for a brick. (Pause for five minutes. Write your list.) How many items do you have on your list?

I’ve done that exercise with groups of small business owners. Some get 30 and even 40 items, some only 10 or 20. And the point of the exercise is that creativity comes from quantity of ideas, not quality of ideas. Weed out the bad ones later. When it’s time to come up with new ideas, make a long list first. The longer, the better.

I was reminded of this by BNET‘s “The Top 10 Catalysts for Great Ideas”:

1. When you’re inspired
2. Brainstorming with others
3. When you’re immersed in a project
4. When you’re happy
5. Collaborating with a partner
6. Daydreaming
7. Analyzing a problem
8. Driving
9. Commuting to and from work
10. Reading books in your field

Which is then nicely complemented by LifeDev‘s “15 widespread creativity myths”:

1. Creative people are weird.
2. Putting a bunch of people together in a large room will produce creative ideas.
3. Only creative people have creative ideas.
4. Deadlines spark creativity.
5. Competition is better than collaboration.
6. Creatives are Messy.
7. Structure is bad for creative thinking.
8. An idea WILL come in one sitting.
9. Creativity requires high-level thinking.
10. The only motivator[s] for creative thinking [are] money and fear.
11. Ridiculous ideas are worthless.
12. Only certain jobs use creativity.
13. Creative people always have great ideas.
14. I’ll never forget my ideas.
15. More and better technology will yield more and better ideas.

Interesting, do you agree?