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Snapchat OKs Settlement With Ousted Co-Founder

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By Daniel Taylor, Esq. on September 11, 2014 12:22 PM

In a statement suspiciously timed to coincide with the media coverage of Apple's new product launch, Snapchat quietly announced Tuesday that it's settled a lawsuit filed against the company by one of its founders.

Although the terms of the settlement weren't disclosed, Snapchat was recently valued at $10 billion following a round of venture capital fundraising, reports Forbes, making it likely that the settlement of the lawsuit by ousted co-founder Reggie Brown didn't come cheap.

What was Brown's beef with his former Stanford frat brothers and company co-founders Even Spiegel and Bobby Murphy?

Whose Idea Was It Anyway?

In his lawsuit, Brown claimed that he came up with initial idea for the Snapchat app, which allows users to send self-destructing video and picture messages to other users. Brown shared his idea with his Stanford fraternity brothers Spiegel and Murphy who formed a company, splitting ownership with each other but leaving Brown out of the mix.

Brown brought a lawsuit asking for a 20 percent ownership stake in the company. Depositions from the lawsuit, leaked to Business Insider, suggested that even as the company denied that Brown deserved any credit for helping launch the company, his co-founders seemed to think he deserved at least some compensation for his role in Snapchat's early days.

In a statement regarding the settlement, released Friday, Snapchat acknowledged that "Reggie Brown originally came up with the idea of creating an application for sending disappearing picture messages while he was a student at Stanford University."

Earlier FTC Settlement

This recent settlement comes on the heels of Snapchat's settlement earlier this year with the Federal Trade Commission over privacy complaints.

The FTC alleged that Snapchat had misrepresented how long the messages sent by users actually last, as there are several ways for recipients to save messages they receive using either third-party apps or by taking screenshots. In addition, the FTC found that Snapchat was harvesting data from users' phones without disclosing the practice.

Under the terms of that settlement, Snapchat agreed to employ an independent third-party monitor to assess its privacy and data protection.

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