The lawsuit against Arianna Huffington and Kenneth Lerer, co-founders of The Huffington Post has finally been settled.
Democratic consultants Peter Daou and James Boyce accused the HuffPo founders of stealing their idea for the website back in 2004, which was proposed as a Democratic alternative to other prominent conservative news sites of the time.
The plaintiffs claim that Huffington backstabbed Daou and Boyce after them agreeing to work on the project.
Huffington allegedly underwent a joint proposal with potential investors secretly, and managed to raise $1 million without notifying Daou and Boyce, after which she dropped them from the project altogether.
Although some accusations were shut down by the court, the judge allowed claims for idea misappropriation, fraud and unjust enrichment to advance.
Huffington has denied all accusations of theft and attempted to win the case on a summary judgement motion last year.
“The combination of pre-existing elements, what plaintiffs allege here, is not novel as a matter of law,” read the motion. “The record is clear, and plaintiffs concede, that each of the elements of their alleged idea existed in varying forms, on countless websites, prior to November 2004, when plaintiffs disclosed their idea to defendants.”
Judge Charles Ramos allowed the case to continue to trial last February and engaged with Huffington’s attorney, Leslie Fagen, in an interesting debate about original content on the internet. He was quoted as saying:
“Every idea that’s protected as novel is not really novel in that it’s based upon something that came before it…Every tool has elements that are not novel, but at some point that tool becomes novel. There’s something that’s added to the existing elements that makes it protectable. It seems a bit arbitrary and it’s very, very difficult to define, particularly difficult when we’re not dealing with an object here, we’re dealing with an idea that exists in an area that’s very new: social media, the Internet.”
Fagen had this to say in response:
“Yes…Ideas come from older ideas, we all know that, but the courts, because they know they are dealing with the creation of a property right when they say this is novel, they have to be very careful. … You cannot allow, I think, novelty to arise from taking known ingredients and putting them together, especially when [plaintiffs] agreed. Look, the record shows all of these websites have all of these elements, every single one of them: MSNBC, Fox News, AlterNet, Salon. They existed.”
The attorney continued.
“So they’re saying, ‘Oh, scoops and exclusives; online, offline, newspapers have exclusives. News aggregation, that’s been known for years. Reader commentary, known for years. Op-eds and opinions by third parties; it’s not new.”
The Judge maintained that as long as a single unique element is present, an idea is new, quoting:
“What bedevils me about this case is that all they need is one element that’s novel. One, that’s it. That’s what makes it novel.”
Details of the settlement have not been made public, however it is confirmed by HuffPo’s statement that money is exchanging hands. Jeff Bercovici of Forbes reports good news for shareholders at the time of the sale, affirming that a reserve of $9.8 million pending the outcome of the case will be paid out. Both the plaintiffs and HuffPo have commented.
Huffington Post has said:
“We are very happy that this has concluded, and very happy with the settlement agreement, which speaks for itself: All claims against Arianna Huffington and Kenneth Lerer are dismissed with prejudice, which claims plaintiffs have now determined are without merit. Plaintiffs now acknowledge that Arianna Huffington and Kenneth Lerer committed no acts of wrongdoing. AOL, Inc. shall pay all sums due and owing under the terms of a settlement between AOL, Inc. and plaintiffs.”
Daou, previously calling Huffington a “Robber Baron CEO”, had this to say:
“I am grateful to have settled my dispute with Arianna Huffington over the founding of The Huffington Post. Having devoted much of my personal activism to the challenges facing girls and women and having been privileged to serve as an adviser to Hillary Clinton in her campaign to crack the ultimate glass ceiling, I know firsthand the obstacles Arianna has faced in her quest to reshape the media landscape. In light of my experience, I will be establishing the Daou Foundation (daoufoundation.org) to provide grants to young women activists and entrepreneurs who are using social media and technology to change our world for the better.”