When VC’s Feud…

When I was in college, a friend of mine had three pirahna he kept in his dorm room. Over the course of a year, Blinky ended up eating Zero and Fatboy. He then looked very lonely. My friend used to say that he "had trouble feeling sorry for someone who just ate his two friends."

Well, just so you don’t think that VC’s only pick on entrepreneurs, every once and a while, VC’s class heads in public. One of the stranger encounters was captured today in PE Week in a piece called Random Ramblings: Sequoia v. ComVen:

"The VSP Capital Memorial trophy is awarded each year to the venture capitalfirm that most effectively turns itself into a punching bag. The 2007 front runner is ComVentures.

First came the recent FilmLoop flap, in which ComVentures engineered the sale of one portfolio company to another. Now comes another troubling development: While ComVentures was working to sell FilmLoop last December, it also was being sued by Sequoia Capital for copyright infringement. ComVentures says the case has since been “resolved amicably,” even though no resolution has yet appeared in the court’s online records system. Neither Sequoia nor its attorney returned request for comment or confirmation (download all relevant court filings here).

This is a bizarre story for two reasons. First, because of how obstinate ComVentures seems to have been. Second, because such cases generally get resolved long before they reach court dockets (credit to VC Litigation Reporter for first spotting this).

According to court documents, both Sequoia and ComVentures redesigned their websites last year. Sequoia went first with an August 30 launch, and even took the unusual step of registering the site as an original work of authorship with the U.S. Copyright Office. Soon after, the firm’s servers began “to detect significant and prolonged access to the site from someone sharing the IP address for, and presumably within, the ComVentures network.” A printout of Sequoia’s server logs were filed with the court, and can be downloaded below as Docs 2. In all there were 373 recorded visits.

Six weeks later, ComVentures unveiled its own redesign. The new site had a number of striking similarities to the Sequoia site, in terms of both setup and style. For example, check out this ComVentures page and this Sequoia Capital page. Pay particular attention to the geography and company-stage navigation bars.

Had the complaint stopped here, I would have assumed that some ComVentures lackey/designer had simply made a mistake in not knowing that you can’t rip off someone else’s site. He/she was told that the ComVentures brain-trust admired the Sequoia site, and took that to mean “copy it.” After all, the first question any web designer asks when building a new site is: “What other sites do you like?”

And maybe that’s exactly what happened. But what happened next is bizarre. Sequoia’s Mike Moritz allegedly called ComVentures chief Roland van der Meer to complain on at least two separate occasions. Sequoia’s outside counsel also formalized the request in a letter to ComVentures’ outside counsel. The complaint alleges that ComVentures agreed to make “certain changes,” but then that the only real changes made were that the offending pages were not directly linkable from the ComVentures homepage. In other words, the alleged copyright infringement remained, but was just a bit harder to find.

Again, I would like to think this was a slip up (sometimes hard to find all legacy pages) – except that the offending pages are still online nearly three months after the suit was filed. Maybe there was concern that full retreat would be perceived as admittance of guilt, but ComVentures isn’t willing to get into that level of detail with me (not that I blame them).

Sequoia had been seeking both real and punitive damages, and I do not know if any money changed hands via the apparent settlement. But I do know that this is just one more headache ComVentures did not need right now…

Two other quick thoughts: (1) It is important to note that it is difficult to judge a legal complaint’s allegations without also getting the defendant’s point-of-view. In this case, ComVentures does not seem to have filed any documents. (2) Sequoia picking on ComVentures is a bit like Iron Mike picking on King Hippo, and I’d certainly agree that Sequoiaseems to takeitself a bit too seriously. But, that said, no one knows the value of copyright — or patent — protection better than a VC firm, and it makes total sense that they’d want to protect what they feel is theirs."