Facebook: friends and enemiesPosted: April 13, 2011
Friends and enemies
JUST when it looked like the fuss over Facebook’s early days might be about to die down, the long-running legal soap opera surrounding claims to the site’s ownership has sprung another surprise. On April 11th Paul Ceglia, who last year filed a lawsuit arguing that he was entitled to half of the equity stake held by Mark Zuckerberg, the site’s youthful co-founder, submitted an amended complaint complete with e-mails that he claimed would support his case for a share in the company.
Mr Ceglia’s bombshell was dropped on the same day that Facebook’s boss received some far better news in the form of a decision by a panel of federal appeals-court judges in San Francisco that probably scuppers another legal battle being waged over the social-network’s ownership. The judgment threw out a petition by two of Mr Zuckerberg’s contemporaries at Harvard University, Cameron and Tyler Winklevoss—twins dubbed “the Winklevi” in “The Social Network”, a fictional film about Facebook’s creation—who wanted to scrap a settlement they had reached with Facebook in 2008. The settlement required the Winklevosses and Divya Narendra, another former Harvard student, to end their claim that Mr Zuckerberg had stolen their idea for a social-networking service, in return for a deal reportedly worth $65m, including Facebook shares.
Since then, the value of Facebook has soared (it is now said to be worth up to $60 billion), which may have prompted the Winklevosses to try to get the settlement scrapped, giving them an opportunity to fight for more generous terms. But Monday’s ruling rejected their claim that they had been misled about the true value of Facebook when the deal was signed. “The Winklevosses are not the first parties bested by a competitor who then seek to gain through litigation what they were unable to achieve in the marketplace,” wrote one of the judges. “At some point litigation must come to an end,” he added. “That point has now been reached.” However, after the panel’s ruling the Winklevosses’ lawyer suggested that his clients would seek a judgment from the wider court.
Meanwhile, Mr Ceglia appears to be gearing up in his fight with Mr Zuckerberg. He has engaged DLA Piper, a high-powered law firm, to represent him and is pressing his claim that a contract he allegedly signed with Mr Zuckerberg in 2003 entitles him to a share in the firm. The deal supposedly involved Mr Ceglia giving Mr Zuckerberg $1,000 to develop his social-networking site in return for a substantial chunk of any future business.
Lawyers representing Mr Zuckerberg and Facebook have dismissed Mr Ceglia’s argument that he is entitled to a stake in the company. And they have argued that the e-mails he has produced to support it are phony. Some of these purportedly show Mr Zuckerberg discussing details of the site’s development with Mr Ceglia and giving warning of a potential rival service being developed by nameless fellow students (presumably the Winklevosses and Mr Narendra). The courts will no doubt want to establish whether the e-mails are genuine—and just why Mr Ceglia waited seven years before coming forward to stake his claim.