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Analysis & Opinion
08.12.08 Whose Are The Classmates?
By Albina Kovalyova

The British company i-CD Publishing and its affiliates Carlene Investment Ltd. and Passado Ltd. have filed a lawsuit against Albert Popkov, the creator of the popular Russian social networking site The case, brought before the High Court in London, accuses Popkov of violating a contract he had signed with his former employer, i-CD. The company now demands compensation for this in the form of its recognition as the owner of Odnoklassniki, its domain name, and all of the company's profits., worth an estimated $100-150 million, is perhaps the most popular social networking site in Russia. One of the secrets of its success is that it allows members not only to create a user profile with personal information and upload photos, but also to track down former classmates using a school name tracking system. Membership is free, and it is also possible to “befriend” anyone else who is registered on the site, even if they went to a different school. People can send each other messages and be part of special interest groups and fan clubs. “I think that this site is popular because it is used by adults who are nostalgic for their childhood,” said Liza Miller, a 25-year-old user of the site.

Popkov believes the success of his Web site is due to the involvement of a good team, the financing that was put into the company, and the fact that the site is profitable, which explains a puzzling phenomenon – many users say it is not actually the best. “I am not sure why it is hugely popular, because the alternative Russian social networking site, is much better,” said Miller.

The dispute around the site centers on Popkov’s employment at i-CD Publishing. Alastair Crawford, the UK-based company’s founder and CEO, claims that was developed while Popkov was still working for i-CD. “He was working with us for seven years, including at the time he conceived Odnoklassniki. He built the network for himself, he registered the domain for himself and he built the database for himself, and then he resigned. He launched his site sixteen days after terminating employment,” he said.

Popkov's contract with i-CD, Crawford claims, included a clause prohibiting work on any other project which could be a source of competition for the company. Popkov was a full-time employee at i-CD Publishing from 2000 to 2006, and during this time was involved in the development of i-CD’s flagship database program At the same time, i-CD's affiliate Passado Ltd. was developing a social networking site called Passado Classmates. According to the lawsuit, Popkov helped with its development, and was responsible for launching the site in Russia. He was to research the Russian internet market for social networking sites, to gather data and information about Russian schools for the site, and to register the domain name. While being entrusted with creating the site for his employer, he registered the company under his own name instead.

Popkov, however, denies all allegations of having done wrong. He claims that he did not have any contract with Passado, and during his last years of working for the company, he had nothing to do with the development of the Passado networking site. “i-CD and Passado are two different companies. I had a contract with i-CD which I fully fulfilled. At the time of my resignation, I did not have any contract with Passado, which was making this site. I did not have any contract with this company and so did not feel that I had any obligations before them,” he said.

Pokov's defense documents state that the owner of offered his former employer to get involved in his new project in 2006, but that the latter refused. “When I realized that we needed money, the person who I first approached was my previous employer, because we had a good relationship at that time and parted on good terms. He did not show an interest. He said neither yes nor no,” Popkov said.

But i-CD not only questions this version of events, but Popkov’s right to offer it partnership in the first place. “The real question is this: if an employee builds something while working for you and then leaves, who then owns that thing? If he has built it in secret, when he should have been working for you?” Crawford asked.

It is unclear whose point of view the court will side with. Both parties appear confident of success. “We believe we have a very strong case. We considered this very carefully indeed, and we've been approaching this step for several years. So we are very confident that we will win,” said Crawford. Popkov, on his part, says that the truth will protect him.

Mark Brown of Bristows, an expert in UK intellectual law and co-councilor to the law firm Padva, Haslam-Jones & Partners LLP, believes that there are two main areas in which i-CD Publishing has grounds for a case against Popkov. The first is a breach of contract, which could have a clause stating that Popkov was under contract not only to i-CD, but to its affiliated, parent or associated companies, including Passado. The second area is of copyright law, and here the issue will come down to the similarity between projects. “If what [Popkov] was doing while he was at work for them and officially doing for them in the open, was very closely linked to what he was doing on the side, then under UK law all intellectual property rights are automatically transferred to the employer,” he said. On the other hand, if Popkov was developing in his spare time while he was employed by i-CD, but his site is substantially different from what he was working on for his former employer, he can claim the copyright for his new site.

Another issue relevant to this case is that of jurisdiction. Popkov claims that Odnoklassniki is a Russian company subject to Russian law. This would considerably muddy the legal waters. However, Crawford claims that Odnoklassniki is not a Russian company, and is therefore subject to English law. “Popkov is a British citizen, he lives in Fulham, and Odnoklassniki is an English company. So there is absolutely no crossover of jurisdiction. There is no question of the Russian courts not implementing an English decision,” he said.

Untangling this knot will undoubtedly take some time, and probably a considerable amount of money. For both sides the stakes seem worth it: at the moment, the controlling stake in Odnoklassniki Ltd. belongs to Digital Sky Technology, and Popkov and his wife hold approximately 21 percent each of the company's shares.

But whatever the outcome, it seems unlikely to affect ordinary users. “Both companies are committed to providing the highest possible standards of service for these kinds of products. So I would be very surprised if the users of Odnoklassniki notice any change at all,” said Crawford when asked what a change of ownership would entail for the site.
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