A rather strange discussion is going on at digg.com's site about Steven Mallett allegedly stealing code form digg.com.

In the heat of the moment most commenters wished Mr. Mallett into a worser place. However as it turns out Mr. Mallet has just used code publicly available through Meneame earlier. The company (or project) released the code used by them (they are by themselves a digg.com clone) for their homepage as a open source package. digg.com even 'posted' a guideline on how to get it installed recently.

Strange enough they had code snippets from digg's CSS in their CSS.

It's an interesting case though and shows how assets are valued in recent times. Design matters but it does not make the users stick. As a prove compare the many rather ugly MySpace pages and templates. It is also nothing you can build a viable case on.

However what happens if someone puts money into 'cloning' your design and functionality and releasing it as Open Source so that hundreds of identical sites in all topics (especially where digg.com does not have a following already..)?

The only possibility is to innovate further - delivering a better service to your users and or customers and fight. digg.com has found a concept for sorting through news stories but it is highly it will create a monopoly in doing so.