The recent blockbuster film, "The Social Network", is proving to be extremely popular at the Box Office and has stirred up plenty of discussion. Perhaps this is because it features three phenomena that many people find quite interesting: Facebook; the fact that one truly great idea could change your life (provided someone else doesn't steal it); and Justin Timberlake.
But of all of these, it is the second that is providing the most fodder for 'water-cooler talk' and blog rants. Specifically: did Facebook founder, Mark Zuckerburg, really 'steal' the Winklevoss twins' idea for a new social networking site, and, perhaps more importantly, was that idea the key to Facebook's subsequent success?
Regardless of your opinion on those issues, the film reinforces the importance of protecting commercial ideas early in their development, and highlights the difference between two key aspects of many good ideas: the 'what' and the 'how'.
Particularly in the technology field, there can be a big difference between what an idea or invention is, and how to implement it. While better-known forms of intellectual property protection (eg. copyright, patents etc.) will often cover the implementation (or 'how') of technological ideas once they begin to be developed, other methods can be more effective for protecting the fundamental concept (or 'what') in early stages. This initial protection can enhance the inventor's ability to bring the idea to the market (or the patent office) before their competitors.
Protecting the 'What' - Contractual Methods and Confidential Information
In the film, it appears that, while Zuckerberg did not use any of the computer code created by the Winklevoss' previous programmer, the general idea of a social network with an exclusivity element (or 'velvet rope') was appropriated for Facebook. Perhaps this 'what' could have been protected using some of the methods described briefly, and in very general terms, below.
Breach of Confidence & Non-disclosure Agreements
Certain information, due to its nature and the circumstances of its disclosure to another party, can automatically create a duty on the recipient not to disclose it. While confidential information is not property to be owned, the common law duty of confidence restricts other parties' ability to do certain acts involving information if that information has the "necessary quality of confidence" and has been disclosed to them in confidential circumstances (ie. certain relationships). If the information and disclosure meet these requirements, the recipient generally cannot disclose, threaten to disclose, or use the information in a way that is detrimental to the original discloser (including use in a competing product or service).
Concepts and ideas (like the one in question) can be considered confidential information, but only if they are sufficiently specific, original and capable of being actualised. In all cases, specifying that certain information is considered to be confidential will provide more certain protection.
However, as the fact or circumstances of the original disclosure, and thus the existence of the duty, can be disputed by the parties, it will usually be worthwhile to formalise the duty in a non-disclosure agreement. These agreements are most effective when they set out the key information and specify that certain acts (including use of the idea) are prohibited under the terms.
Depending on the nature of the 'key idea', though, a party may still be able to implement the idea without breaching the agreement, which is why it should be combined with additional restraints.
Restraints of Trade
A contractual requirement to not engage in certain activities for a specified period will often be the best way to prevent an immediate party from 'stealing' an idea. However, restraints of trade that are not 'reasonable' can be set aside by the courts, so it is important that any restraint is limited to a very specific realm.
For example, a requirement to not create or assist with the creation of a social networking site specifically designed for, or offered exclusively to, Harvard University students, for a period of, say, 18 months, may have been a reasonable and effective restraint on Zuckerberg's activities. Whether or not he would have agreed to it is another story entirely.
Specific restraints, and related non-disclosure terms, can be particularly effective when entering a new field and pitching ideas to third parties. Such arrangements are fairly common in the technology industry and in film and television development.
Other Practical Steps
In some cases, practical steps can be the most effective method of protection. For example, where possible, 'ring-fencing' the idea by only providing certain parts of the idea to each contractor could remove even the temptation to use the idea.
Incentivising those responsible for development of an idea, perhaps with a stake in the endeavour or some degree of control, may also limit the likelihood of any issues. For example, had Zuckerberg been brought in as a partner, and encouraged to implement his other ideas, the creation of Facebook might not have been interesting enough to form the basis of a Hollywood film.
Protecting the 'How' - Copyright, Patents & Registered Designs
While the protection of developed or expressed ideas (the 'how') using better-known forms of intellectual property protection is outside the scope of this article, the initial protection of the 'what' can have implications for the future protection of the developed idea, particularly in the technology field.
Apart from computer software (including social-networking websites), which is not patentable in New Zealand (see our article here, many technological ideas may be eligible for a patent, and the 20-year monopoly that goes with it. However, amongst other restrictions, only novel (ie. previously-undisclosed) inventions can be granted patents, which means that preventing use/disclosure, perhaps using the methods discussed above, can become extremely important. The same applies for registered designs, which can sometimes protect the form of the invention, rather than the function.
Other traditional forms of intellectual property protection, like copyright, can also provide increasing protection during the development of an idea, and can be a valuable shield against competitors once the idea is marketed. However, sometimes the mere ability to bring that idea to the market ahead of competitors can be the most effective prevention against copying, and care should be taken with the protection of that initial concept, or 'what'.
Application to the Origins of Facebook
Based on the version of events portrayed in the film, it is arguable that the Winklevoss twins could have taken steps to prevent Mark Zuckerberg's creation of Facebook. Zuckerberg's unquestioned ability and the other features of the product aside, the idea (or marketing strategy) of Ivy League exclusivity may have been the key to Facebook's initial success. While better-known forms of intellectual property protection would likely have only protected the specific computer code (or 'how') written by the previous programmer, a simple contract, or clear stipulation of the idea as confidential, may have provided enough obstacles to discourage the creation of Facebook, perhaps leaving 500 million people less connected to each other, but significantly more productive.