Corgi, a startup in the insurance tech field backed by Y Combinator, found itself at the center of another scandal this week after Papermark, the developer of open source data room software, alleged that Corgi had lifted its software and claimed it as their own.

Corgi refuted these claims, stating to TechCrunch, “No code was taken from Papermark.”

However, there were justifiable reasons for the belief in the initial accusation, which originated from Papermark co-founder Marc Seitz on X, concerning Corgi’s recently launched product known as Dataroom.

Seitz’s tweet gained traction as he posted screenshots displaying Corgi’s product utilizing identical phrasing for the same features as those of Papermark, exactly matching. Deal room software primarily facilitates secure document sharing and is commonly employed by startups to present to VCs and provide supporting documents for due diligence.

Seitz even labeled Corgi’s new offering as copyright and license infringing, dubbing it “fraud.”

Nico Laqua, co-founder and CEO of Corgi, saw the tweet and committed to investigating the matter. Shortly after, he responded on X with a complete denial, providing evidence that the coding differed between the two offerings.

While he strongly refuted the claims of a license infringement (“‘stole my enterprise-code’ differs from ‘copied my style,” Laqua contended), he acknowledged that the use of vibe-coding did lead to similar features.

“In hindsight, we should’ve crafted our own language and visual elements rather than drawing cues from existing products, and that responsibility falls on us,” he commented.

A spokesperson for Corgi confirmed to TechCrunch that the disputed features were indeed vibe-coded and stated that they have already been altered, minimizing the situation.

“The issues were limited to visual aspects on two ancillary settings pages,” the spokesperson explained, noting that these components were “immediately updated” and that “our team verified that no code was taken from Papermark.”

Laqua and the spokesperson further accused Papermark of making these claims due to Corgi’s offering of a more affordable product. “I understand this is frustrating since we’re presenting something largely free that competes with his SaaS. I’d be upset too,” Laqua remarked regarding Seitz. (Seitz has yet to respond to our inquiry for a comment.)

Nonetheless, this clearly wasn’t merely feelings of resentment given the identical features and wording used.

It raises a new question: If vibe coding allows for easy imitation of the look, feel, and functionality of someone else’s creation, without replicating every line of code, how significant is it if the source does not match?

Legally, this distinction is certainly crucial. Therefore, it stands apart from the controversy involving Y Combinator graduate PearAI, a startup from 2024 that acknowledged emulating another open source project and releasing it under its own license.

From a moral standpoint, this situation is ambiguous and may become increasingly frequent.

As fellow Y Combinator alumnus and OpenProse founder Dan Barrett articulated on X: “In a reality where a bot can effortlessly replicate the structure of something, even when the character-level code differs … what differentiates the unacceptable from the acceptable? Current IP law, which is a remnant of the old era? Isn’t there a more profound principle at play?”

Corgi is now actively attempting to address any reputational harm. The company has issued a cease-and-desist notice to Seitz, demanding the removal of the tweet, as confirmed to TechCrunch.

The founder of Hello World Cafe, which somewhat competes with Corgi’s coffee shop venture, also claims on X that he received a cease-and-desist letter from Corgi’s attorneys regarding his tweet that humorously referenced the Dataroom issue. However, X continues to remember. There have been hundreds of comments and numerous subtweets. (Corgi also runs a 24-hour coffee shop, with plans for more, as Laqua recently mentioned on Harry Stebbings’ podcast.)

This recent uproar adds to an expanding list of discussions surrounding Corgi. The two-year-old startup has also gained a reputation for its litigious nature, already filing lawsuits against various former employees.

Laqua recently gained attention for his remarks on Stebbings’ podcast regarding his expectations for employees to work seven days a week. “What you can accomplish in five days, I assure you, you will achieve even more in six and seven,” he said.

This encapsulates the fallacy of startup hustle culture. Extensive research consistently indicates that human productivity does not follow a quadratic pattern. While intensive sprints can be beneficial (and promote teamwork) for immediate issues like site crashes, research indicates that, as a rule, increased working hours diminish productivity, rather than enhancing it.

The startup has also caused a stir for its rapid fundraising with escalating valuations, even by AI-startup norms. Last month, Corgi secured a $106 million Series B1, valuing the firm at $2.6 billion, just three weeks after announcing a $160 million Series B at a $1.3 billion valuation, and four months after its $108 million Series A.