High tech online service ventures are facing a particularly sticky problem: site theft. When all you have between you and a competitor is some HTML code and a database, the barriers to entry are too low for safety, particularly in a borderless Internet environment. Look at the suit that Facebook has brought against German competitor StudiVZ, which claims 10 million members in Germany, Austria and Switzerland, as the Financial Times reported.
The lawsuit comes several months after Facebook, which claims more than 80m active users, launched a German language version of its own website. That site has since struggled to gain traction among German users, according to one person close to the company. In its complaint, Facebook accused StudiVZ of copying entire portions of the site's design, including features such as Facebook's distinctive "wall", which allows users to leave messages on each other's profile pages.The problem, I think, is closely tied to perceptions of copyright among younger entrepreneurs. For example, StudiVZ is a spinoff from Humboldt University, and publishing company Holtzbrinck Verlag bought it for â‚¬80 million, or about $126.8 million.
Because there are relatively few headlines about the topic, it probably slips under the radar. But there are hints that websites of all sizes and levels of fame are duplicated. The damage can also be significant. In the case of Facebook, StudiVZ got to the German-speaking market before the better known site and establishing what appears to be the dominant brand. If, indeed, StudiVZ did lift content and design as alleged, then Facebook would have been frozen out in part by its own intellectual property, a major risk when you can't afford to roll out in all markets and all languages simultaneously -- and who can?
The loss to a company can also be a straightforward siphoning of traffic. Look at the case of the MMORPG (massively multi-player online role playing game) RuneScape by Jagex Software -- a rare example of high tech success that had gone largely unnoticed by the industry.
But others were paying attention. Someone has built a large-scale, me-too version of the game with the same look and feel (same menu and map, according to a player of both games I spoke to), and Google AdSense advertisements running down the left side of the site to pay the bills, but apparently without permission from the original. When you get to moparscape.org, a user is asked, before entering, to agree that he or she is not "an employee of Jagex LTD, runescape, or adlex solicitors", and "are not a family member or acquaintance of the aforementioned."
Pay no attention to the programmers behind the curtain -- we'll just close our eyes, because if we can't see you, you can't see us. The cars on the opening page of the game site also suggest that the people involved might have intentionally used the trademarked name MOPAR, which is the parts arm of Chevrolet. (Neither Moparscape.org nor Jagex responded to my email requests for interviews.)
To give a sense of Runescape's actual importance, it is in the top 500 sites tracked by Alexa.com. And while hardly in that traffic league, Moparscape.org is attracting enough users to be measurable, which means incremental revenue never hits the Jagex site. Unfortunately for the game's creator, private servers running unauthorized instances of games have long been rampant on the Web.
All this might seem a curiosity until you remember that an increasing amount of venture capital is going into information services, including Web 2.0 and other website start-ups. And if there's anything that investors dislike, it's the possibility that they might fund R&D that competitors will lift. So, entrepreneurs, you'd better plan on putting some of that money into IP attorney retainers -- chances are, you're going to need it.
Data Security 1 image via stock.xchng by user woodsy, used with site's standard license