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The Almighty Buck The Courts

Facebook Wants Ownership Case Thrown Out 266

Posted by samzenpus
from the your-own-personal-facebook dept.
crimeandpunishment writes "Attorneys for Facebook and a New York man claiming majority ownership of the site faced off in a Buffalo courtroom Tuesday, and if Facebook gets its way there won't be too many more days in court. The site wants to get Paul Ceglia's claim thrown out of court. He claims a seven-year-old agreement with Facebook founder Mark Zuckerberg entitles him to 84 percent of the company. Facebook acknowledges Ceglia and Zuckerberg worked together, but says the contract Ceglia submitted was full of 'things that don't make sense.'"
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Facebook Wants Ownership Case Thrown Out

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  • by lostros (260405) on Wednesday July 21, 2010 @06:56PM (#32984446)

    It's the chewbacca defense! look at the monkey, look at the silly monkey

  • make sense? (Score:5, Insightful)

    by dAzED1 (33635) <brianlamere@ya[ ].com ['hoo' in gap]> on Wednesday July 21, 2010 @06:57PM (#32984456) Homepage Journal

    well maybe not now, when it's "worth" so much, but back then when he was just a thieving punk kid with no money the relationship was beneficial to him. Contracts don't need to be written by lawyers to be legally binding.

    • Re:make sense? (Score:5, Insightful)

      by Fnkmaster (89084) on Wednesday July 21, 2010 @07:19PM (#32984630)

      What I don't get is why would they even *think* of letting this get to court. Seriously. Even if the guy's chance of prevailing is only 10%, the downside risk is absolutely gigantic for Zuckerberg, AND for the venture capital guys that have put up a lot of money for Facebook.

      Knowing as they do that the signature is legitimate, they should have offered this guy 10 or 20 million bucks to just go away rather than taking the risk that this guy will end up seizing a big chunk of equity.

      Also shows you how absolutely useless the "due diligence" is that VCs perform. Zuckerberg probably never disclosed this old contract from the early days to any of his investors or they would have forced a settlement with this guy before things got this far. I've gotta think they are squirming just a bit right now.

      • Re:make sense? (Score:4, Interesting)

        by Surt (22457) on Wednesday July 21, 2010 @07:29PM (#32984720) Homepage Journal

        Are you telling me the VCs wouldn't have a contract with Zuckerberg that says he owes them absolutely everything if he failed to disclose a prior contractual obligation materially affecting the company? That would be crazy stupid if true.

      • Re: (Score:3, Interesting)

        Yeah, that's just stupidity on FB's part.

        "Look, you've got a claim to 84% of something that's not worth a lot of direct cash. You'll have to prove it in court. After maybe five years of appeals, you'll be exhausted personally and financially, and you'll have at most, 25% chance of having this work out. You can spend millions to maybe make millions.

        "Or, if I can direct your attention to this new contract and cheque for X million dollars, we have another option available..."

        • Re:make sense? (Score:4, Informative)

          by TooMuchToDo (882796) on Wednesday July 21, 2010 @07:50PM (#32984902)
          You're forgetting. Most attorneys, if they think you have somewhat of a decent case, also have VC money that gets used to fund a civil suit. So it's VC vs VC. Who has deeper pockets is the question.
        • Re:make sense? (Score:5, Interesting)

          by blair1q (305137) on Wednesday July 21, 2010 @08:03PM (#32984980) Journal

          Depends on his lawyers more than him.

          They'll be looking at hundreds of millions of dollars in legal fees, no matter how long it takes. And they can offer to work on contingency.

          If they believe it's righteous, they won't let anyone offer him X million. It's going to be a big chunk of the company, or it's going to go to court.

          In truth, depending on what the VCs own, it may end up being only a big chunk of Zuckerberg's personal share of the company.

          Though the fact that Zuckerberg may not have had the right to enter into deals with the VCs, since Ceglia may be the true owner of the company, may end up costing Zuckerberg all of his nut.

          This isn't going away for 8 figures.

        • Re: (Score:3, Insightful)

          by rtb61 (674572)

          I see you really just don't understand greedy people. They are greedy, they want it all, they don't just want all their stuff, they also want all your stuff, in fact they want all of everyone's stuff.

          In this case it seems like some asshat stole an idea and took that idea to someone else to fund it's development and then stole it again to resell to someone else but retain significantly greater ownership.

          You can almost bet the next big stink will be about a whole bunch of stolen code. "They trust me, Dum

      • Re: (Score:3, Insightful)

        by neoform (551705)

        Knowing as they do that the signature is legitimate, they should have offered this guy 10 or 20 million bucks to just go away rather than taking the risk that this guy will end up seizing a big chunk of equity.

        How do you know they didn't?

        Maybe they offered $50M and the guy said, "I want a billion"..?

      • Wait, wasn't he supposed to have stolen the idea from a couple of millionaire playboys? Or wasn't it that guy who thought he was interesting enough to write an autobiography right after getting out of college? Or wasn't it one of the many predecessor sites he stole the idea from? I'm confused, you're going to have to help me out. If he stole the idea, whose idea was it to begin with again?

        • by blair1q (305137)

          Stealing an idea doesn't make the company the property of the person with the idea. It might give that person rights to some back-payment of royalties, but that'd be it.

          This is a contract that gives Ceglia 50-84% of the company itself, based on developing the idea.

          • Re: (Score:2, Interesting)

            by schmidt349 (690948)

            A contract alleged by a guy who's currently under federal indictment for fraud alleges he owns 84% of Facebook based on a seven year-old contract he never bothered to assert any rights under and is therefore barred by the statute of limitations. If you believe a damn word that huckster says I have a bridge to sell you on the cheap.

            • Re:make sense? (Score:5, Interesting)

              by TheLink (130905) on Thursday July 22, 2010 @02:03AM (#32986940) Journal
              Has Facebook or Zuckerberg come out and said that the contract doesn't exist or is fraudulent?

              So far they're just claiming the contract was full of stuff that doesn't make sense. That's a rather weak rebuttal don't you think?

              OK the Facebook lawyer has serious questions about the authenticity of the contract? Yeah, go submit those questions to court.

              They don't outright state the contract is invalid. I guess they're covering their butts just in case Zuckerberg "forgot" to tell them yet another little detail...

              Zuckerberg doesn't seem that squeaky clean a character either.

              Do contracts automagically expire after 7 years? I doubt it. If it's about exerting rights, lots of shareholders don't do much with their rights, but they do get interested if the CxOs start talking about selling the company without giving the shareholders their "fair share".
            • legal nonsense (Score:3, Interesting)

              by popo (107611)

              1. Ad Hominem attack bears zero relevance to the enforceability of the contract.

              2. Seven years time between enactment and seeking enforcement is not a lot.

              3. Statute of limitations? What? Show me that law please.

              4. Did you sign a contract which states that you will deliver said bridge? If so, you're the one in hot water.

        • by Legion303 (97901)

          Whose idea was it to centralize a location where college kids could keep in touch with one another? I don't know. We were doing it on VAX/VMS back in the early 90s before it was migrated to an OSF2 system. Long before that it was probably the direct successors to ARPANET. Zuckerberg is a newbie.

          • by djlowe (41723) * on Thursday July 22, 2010 @12:21AM (#32986536)

            Whose idea was it to centralize a location where college kids could keep in touch with one another? I don't know. We were doing it on VAX/VMS back in the early 90s before it was migrated to an OSF2 system. Long before that it was probably the direct successors to ARPANET. Zuckerberg is a newbie.

            I hereby nominate the parent post for the soon to be announced "First Yearly Most Irrelevant Slashdot Posts Awards", under the category of "Gosh, We Did Something Similar First Back In The Day And I Thought I'd Mention It Though It Has No Bearing At All On The Topic At Hand" category (Subtitle: "Sour Grapes". Sub-subtitle: "Sweet Jesus, Why Didn't *I* Think To Do That On The Internet?!?").

            I'm kidding: There'll never be such on Slashdot, especially with that category - there would be 'way too many entries, and I'd be posting my own irrelevancies to every discussion, so as to be able to later flood the award nomination submission queue myself! :)

            Regards,

            dj

      • Knowing as they do that the signature is legitimate, they should have offered this guy 10 or 20 million bucks to just go away rather than taking the risk that this guy will end up seizing a big chunk of equity.

        How do you know they didn't? If this guy believes he has a really good case, he'd probably want a heck of a lot more than 10-20 million to settle. If he wins, he may stand to gain 10-20 (or more) BILLION based on facebook's valuation

      • Re:make sense? (Score:5, Insightful)

        by phantomfive (622387) on Wednesday July 21, 2010 @07:49PM (#32984898) Journal
        It could be the VCs want it to go forward. Zuckerberg right now maintains the majority share (that's my understanding), and I'll bet he's a pain to work with. Suppose this guy gets 85%, he's not going to want to run the company, he's going to let the VCs do it. Major win for them.

        How much money do they stand to lose? as long as they don't own more than 15% of the company (collectively), probably nothing. The loss is going to come out of Zuckerberg's share; they can sue him for fraud for not disclosing the existence of that contract. Even if they do own more than 15% of the company, they will have a way better chance of taking the company public and getting an instant payout which they've wanted to do for a while. It will give them a profit and free up their capital to invest in other projects.
        • Re: (Score:3, Interesting)

          by HarvardAce (771954)
          According to the book The Facebook Effect, Zuckerberg only owns 24% of the company at this point. Or at least that's the citation on that number on Facebook's wikipedia page.
        • Re: (Score:3, Interesting)

          by BitterOak (537666)

          It could be the VCs want it to go forward. Zuckerberg right now maintains the majority share (that's my understanding), and I'll bet he's a pain to work with. Suppose this guy gets 85%, he's not going to want to run the company, he's going to let the VCs do it. Major win for them.

          Depends if the 85% is a just a percentage of Zuckerberg's stake in the company, or 85% of the whole company, in which case he'd get a sizable chuck of the VCs' stake as well. That would suck for the VCs.

      • Re:make sense? (Score:4, Informative)

        by LordKronos (470910) on Wednesday July 21, 2010 @10:56PM (#32986126) Homepage

        they should have offered this guy 10 or 20 million bucks to just go away rather than taking the risk that this guy will end up seizing a big chunk of equity.

        Apparently, Ceglia offered to take a settlement, and the facebook team said no thanks:
        http://tech.fortune.cnn.com/2010/07/21/the-massive-hole-in-facebooks-latest-legal-challenge/ [cnn.com]

        "Plaintiff's counsel approached us and offered to discuss ways to make this go away," says Facebook spokesman Barry Schnitt. "We declined."

        P.S. Despite the title of that article being "The massive hole in Facebook's latest legal challenge", it fails to mention exactly what the "massive hole" is. It mentions the lawyers have never seen the contract, but then goes on to say the contract was included in the legal filing. It says that the contract occurred before the facebook idea was even thought up, even though the contract clearly references "the face book". I can't see any holes pointed out in that article.

    • Re:make sense? (Score:5, Informative)

      by blair1q (305137) on Wednesday July 21, 2010 @07:58PM (#32984946) Journal

      Contracts don't need to be written by lawyers to be legally binding.

      No, but it helps. A lot.

      Lawyers know what things have to be in a contract to make it a contract. IANAL, so a little wikipedia check (ymmv) shows it's these things:

              * Agreement (Offer and Acceptance)
              * Capacity to contract
              * Consideration
              * Legal purpose
              * Legality of form
              * Intention to create legal relations
              * Consent to contract
              * Vitiating factors: Mistates, undue influence, misrepresentation, duress

      If Ceglia covered all of those things in this one, then he's got a valid contract and is going to score.

      if he missed even one, or if he failed to carry out some of them, then he's going to become a trivia question.

      From the claims he's made, it sounds like he has the basics down. It's claimed the thing was signed, so the offer was made and accepted (in fact, it sounds like Zuckerberg made the offer). Capacity: if Zuckerberg was 18 and owned the website, that's enough. Consideration: Ceglia traded money for ownership rights; so both sides got value from the deal, and fair value at the time, plus the agreed-upon increase in ownership as the project was delayed. Purpose and form: simple trade of cash for ownership; an investment; happens all the time without event. Intention to create legal relations: it's not as though anyone was forced or tricked into this. Consent: Zuckerberg was the one who entered into the deal.

      So it's down to what wikipedia calls Vitiating Factors, and that's where his lawyer is going to go. Things like the amount of time Ceglia waited, any informalities or irregularities in the documents, etc. And really, given the current value that Ceglia is chasing and Zuckerberg stands to lose, lawyers can find a lot of potentially vitiating circumstances to tie up the case in court.

      The judge who gets the case first may skip all that and render summary judgment based on the hard evidence. Which I haven't seen so I won't play judge, yet.

      Hopefully Zuckerberg will realize he's actually bound to comply with his agreement, and will find a way to settle with Ceglia. I doubt Ceglia will take less than 50%, but I won't be surprised if he takes that if he's offered it, and let the production delays slide. Unless he's hung up on a few $billion here and there...

      • by Anonymous Coward on Wednesday July 21, 2010 @08:46PM (#32985280)

        Hopefully Zuckerberg will realize he's actually bound to comply with his agreement, and will find a way to settle with Ceglia.

        Hopefully? Hopefully Ceglia will acquire Facebook and as a result Facebook goes down in ruin, obliterated in full.

        Ceglia is Gandalf. Zuckerberg is Sauron. And Facebook is Orodruin, or Mt. Doom, the pinnacle of Mordor.

        The veiling shadow that glowers in the East takes shape. Sauron will suffer no rival. From the summit of Barad-dur his eye watches ceaselessly. But he is not so mighty yet that he is above fear. Doubt ever gnaws at him. The rumor has reached him. The heir of Facebook still lives.

        //because I can.

      • Re:make sense? (Score:5, Informative)

        by lordlod (458156) on Wednesday July 21, 2010 @10:11PM (#32985864)

        The list of requirements sounds really fancy and uses big words but it's actually very simple.

        * Agreement (Offer and Acceptance)
        One party offers and the other party accepts. As they both signed this one is simple.

        * Consideration
        This is code word for money. Both parties must get something out of the deal, if only one party benefits it's a gift not a contract. In this instance Zuckerberg got paid and the other guy got ownership.

        * Legal purpose
        * Legality of form
        * Intention to create legal relations
        All of these are broadly the same thing, both parties must have intended it to be a contract. In this example the document has contract written across the top, check.

        * Capacity to contract
        * Consent to contract
        * Vitiating factors: Mistates, undue influence, misrepresentation, duress
        This are all unusual circumstance clauses. If you are mentally disabled, five years old or currently have a blowtorch being applied to your testicles you can't sign a valid contract. It doesn't seem like any of these apply or are being cited.

        In general common sense goes a long way with contracts. If you intend to make a contract, both agree and both benefit you have a contract.

        I am not a lawyer but have studied some law at a university level, primarily contracts. If you take legal advice from people on slashdot even if they claim to be a lawyer you are an idiot.

      • Re:make sense? (Score:4, Informative)

        by Tom (822) on Thursday July 22, 2010 @01:11AM (#32986708) Homepage Journal

        Lawyers know what things have to be in a contract to make it a contract. IANAL, so a little wikipedia check (ymmv) shows it's these things:

        Wikipedia is not an authoritative source on many things. IANAL but contract law was part of my studies. Unless the US is vastly different from most other places, you need exactly one thing for a contract to come into existence. In german "eine beidseitige Willenserklärung", just in case I fuck up the translation: An intentional agreement between two parties.

        All the rest, the form, the lawyer-speak, the bla-bla is just to make it easier to enforce. Oral contracts are as good as written contracts in theory, they are just more difficult to prove. A contract on the back of a napkin is as good as a 300-page legal document reviewed by two seperate legal departments - there's just a higher risk that it contains words you didn't mean like that.

        Most of the stuff you list falls under the invalidation of "intentional" or "agreement", which are the most common attacks on contracts that you can't deny (e.g. they exist in written form or there are reliable witnesses). If you were tricked, for example, you can argue that there wasn't an agreement, because what the other party wanted and made you believe was not true.

        if he missed even one, or if he failed to carry out some of them, then he's going to become a trivia question.

        It ain't that simple. Contracts are regularily open to interpretation as it is semantically impossible to completely and 100% perfectly describe a non-trivial intention. Courts are used to that and it's not a checklist. "Oh, wrong word in paragraph four. You lost." Quite regularily, the courts try to divine the original intention of the parties, as that is what it's all about, and rule according to that. There are quite a list of famous contract law disputes that worked that out.

        But, as you said, the main issue will be that the lawyers on the defending side will try to tie this up in court. I don't see how they can win it, but they sure can delay it. Maybe long enough for Zuckerberg to cash out.

    • by HarvardAce (771954) on Wednesday July 21, 2010 @08:21PM (#32985084) Homepage

      well maybe not now, when it's "worth" so much, but back then when he was just a thieving punk kid with no money the relationship was beneficial to him. Contracts don't need to be written by lawyers to be legally binding.

      Zuckerberg had turned down an offer to work with Microsoft on MP3 playing software ("Synapse") for hundreds of thousands of dollars when he was still in high school. While I know he worked with the Ceglia guy on streetfax for something like $1,000, I doubt he would have sold half of an idea like facebook for merely $1,000, especially since Ceglia was offering absolutely nothing other than the $1,000 -- Zuckerberg would be doing all the work.

  • Doesn't matter (Score:3, Interesting)

    by Monkeedude1212 (1560403) on Wednesday July 21, 2010 @06:58PM (#32984468) Journal

    Regardless of whether it makes sense or not, a contract is a contract. If a Lawyer can make sense of it - WHAMMO - you're done.

    • Re: (Score:2, Funny)

      by pete-classic (75983)

      Ah, but you're forgetting the Chewbacca Defense!

      -Peter

    • by houghi (78078)

      Unless any specifications in the contract are illegal. At least in Belgium that would mean that that the contract is null and void or at least large parts of it, depending the contract.

    • Re: (Score:3, Insightful)

      by DragonWriter (970822)

      Regardless of whether it makes sense or not, a contract is a contract.

      That's actually not even approximately true. If the terms of a written document purporting to be a contract literally don't make sense (i.e., have a clear meaning), then the agreement may quite well fail to be a contract. The absence of sufficiently clear obligations for either party could, for instance, make the agreement fail to be a contract for lack of mutual consideration. Not making sense could also cause a contract to fail for evi

      • by snowgirl (978879)

        I've read through the contract, it does have a bit of stuff that is odd, and inconsistent. (At first it calls the project "The Face Book", but later "The Page Book". However, technical/typographical errors aren't voidable in a contract so long as it is clear what was intended.

        The US has a pretty strong policy of assuming a valid contract. Given that it clearly states that Ceglia gets 50% of all software, and business interests, and Zuckerberg gets $1000 for the project, it's pretty clear that an enforceab

    • Is it possible that they mean it doesn't make any sense, in the sense that, it looks fraudulent?
      After reading through it I can't help but wonder about it. I mean for this guy to have signed a check for $1000 to a college kid, MZ must have been able to convince him there was substantial opportunity for profit. But (A) I thought FB was initially only supposed to be for Harvard? I can't imagine there would have been *too* much money to be made on something that limited. But more importantly, (B) for MZ to ha
      • by snowgirl (978879)

        Further, (IANAL but) the contract looks like it was written by a lawyer. It doesn't look like some form contract that someone pasted into Word and changed the names. Who hires a lawyer to write a contract for a set of transactions totaling $2000?

        IANAL either, but I'm a bit more read in the law than some. The contract looks exactly like it was lifted from some other contract not specifically for that purpose, and then edited up some by someone who was not a lawyer. (I've seen a few of these.)

        Basically, it looks like a food shoved into a glove.

  • I looked into the merits of the case and it seems to me that Ceglia has a valid case and the defendants are using SCO-like defense tactics already at this early point.

    Even with that said, it always seems that the guy with the biggest legal fund wins.

    So, predict away!
    • I looked into the merits of the case and it seems to me that Ceglia has a valid case and the defendants are using SCO-like defense tactics already at this early point.

      You obviously didn't look too hard. From dailyfinance.com [dailyfinance.com]:

      Ceglia's attorney, Paul Argentieri, says bring it on. He says he offered to show Facebook's attorneys the original contract if they were willing to visit his offices in Hornell, N.Y. "They didn't take me up on my offer," Argentieri told DailyFinance. "They had three weeks to get ready to answer this very basic question. I was surprised by their hesitation."

      Ceglia's attorney Argentieri says he will gladly explain why his client waited six- and-a-half years to file his lawsuit when the parties go to trial. He added that his client has plenty of other documents and canceled checks with Zuckerberg's signature.

      That certainly makes Ceglia sound more like SCO than facebook here -- Ceglia's attorney is basically saying "we have lots of evidence but we won't show it to you."

      The timing just doesn't make sense...Zuckerberg was alleged to have stolen the idea from the ConnectU guys in the fall of 2003, was't he? If this contract is actually legitimate, that would have shown that Zuckerberg had the idea long before he had contact with ConnectU -- or am I misr

  • by Anonymous Coward on Wednesday July 21, 2010 @07:01PM (#32984500)

    Don't make sense, as in, someone putting up capital being entitled to a slice of the pie? Hmm.

    I predict they are screwed.

    Note how they are not denying the existence of the agreement or the authenticity of the signatures on that agreement.

    What makes sense and what is legally binding are two different things.

    • by mellon (7048)

      Apparently you have never heard of dilution [wikipedia.org]...

      • by BitZtream (692029)

        What does stock dilution have to do with this? Apparently you have no idea what dilution actually is. Maybe you should read the link you posted.

        He had 84% ownership before, you can split it 150000000 times, and he'll still own 84%, he'll just own 150000000 more shares too.

        The only way he can loss is by selling part of his ownership. Stock dilution isn't just some loophole that lets you selectively rip people off, in fact it has no effect on anyone who doesn't let it.

        I'm going to ignore the fact that you

    • Note how they are not denying the existence of the agreement or the authenticity of the signatures on that agreement.

      They aren't denying that Zuckerberg had a contract to work with Ceglia. What they are denying is that the contract included any mention of facebook. They believe that the actual contract was only for the StreetFax.com work, and not facebook.

      • by snowgirl (978879)

        Note how they are not denying the existence of the agreement or the authenticity of the signatures on that agreement.

        They aren't denying that Zuckerberg had a contract to work with Ceglia. What they are denying is that the contract included any mention of facebook. They believe that the actual contract was only for the StreetFax.com work, and not facebook.

        I doubt that they would be making such a bold assertion, when the contract explicitly includes two parts, one for the StreetFax.com, and another for a different project, describing enough what Facebook was/is, with the "tentative title: 'The Face Book'"

        So, if they're going to argue that, then Zuckerberg should have kept a copy of his contract so that his lawyers could actually see it, and they would be smacking him hard up the back of the head for suggesting that they should make such a claim.

        • So, if they're going to argue that, then Zuckerberg should have kept a copy of his contract so that his lawyers could actually see it, and they would be smacking him hard up the back of the head for suggesting that they should make such a claim.

          He was 18 at the time, and it was 7 years ago. I don't think it's unreasonable to think that he didn't keep good care of the contract, especially if it was only for the streetfax stuff.

          • by snowgirl (978879)

            He was 18 at the time, and it was 7 years ago. I don't think it's unreasonable to think that he didn't keep good care of the contract, especially if it was only for the streetfax stuff.

            You mean, "if he thought it were only for the streefax stuff".

            The contract very plainly and clearly states that Facebook is involved. Thus, all references to the contract not referring to Facebook, must be at least in the subjunctive.

  • by vuffi_raa (1089583) on Wednesday July 21, 2010 @07:01PM (#32984506)
    when you write a contract while stoned and in college.
    • Re: (Score:3, Informative)

      by Surt (22457)

      He'd be lucky if he was stoned. He might be able to weasel out based on not having the capacity to make a binding contract.

      "Competency and Capacity

      A natural person who enters a contract possesses complete legal capacity to be held liable for the duties he or she agrees to undertake, unless the person is a minor, mentally incapacitated, or intoxicated. "

      http://www.enotes.com/everyday-law-encyclopedia/contracts [enotes.com]

  • Not a bad tactic if you can pick a winner; make college students hungry for money sign ridiculous contracts. Not a bad ROI for $1k.
    • by HarvardAce (771954) on Wednesday July 21, 2010 @08:15PM (#32985048) Homepage
      The contract is included in the lawsuit, available here: http://i.cdn.turner.com/money/2010/07/13/technology/facebook_lawsuit/facebook_filing.pdf [turner.com]
      • Thanks :)
      • by rahvin112 (446269) on Wednesday July 21, 2010 @09:59PM (#32985798)

        Holy Smokes. He's got them by the balls. Unless they can find a state specific reason to invalidate the contract they are smoked beyond belief. There is no way they could make a settlement offer. This guy has a standard work for hire contract for Facebook. Zuckerberg never owned it, he was hired to develop it for $1000 dollars. I'll type up the key paragraph here as the PDF is a bitch to read:

        "2. Entire Agreement
        The contract between the Purchaser and Seller as a purchase agreement and "work made for hire" reflects two separate business ventures, the first being the work to be performed directly for the StreetFax Database and the Programming language to be provided by the Seller.
        Second it is for the continued development of the software, program and for the purchase and design of a suitable website for the project Seller has already initiated that is designed to offer the student of Harvard university access to a website similar to a live functioning yearbook with the working title of "The Face Book".

        It is agreed that Purchaser will own a half Interest (50%) in the software, programing language and business interests derived from the expansion of that service to a larger audience."

        It's a standard pull out of a book and make some modifications work for hire contract and it appears he had his lawyer review and modify before everyone signed. These things are generally pretty simple (the entire agreement is 2 pages long) and they are very legally binding generally as all the terms are previously tested and pulled from successfully litigated contracts. It's got everything from Patent indemnification to Liens to Subcontracting rights, it's a very thorough and succinct contract. This Ceglia guy is in a very very good position. From the terms he owns more than 80% of Facebook (due to a late opening). Any value that Zuckerberg sold came out of the percentage that Zuckerberg owned, not Ceglia's portion. IMO the reason there is no settlement is that Ceglia is in such a good legal position he has no reason to settle and Facebook either wins or loses the whole company. His company "StreetFax" owns Facebook lock stock and barrel. Zuckerberg was hired to develop it and manage it, that's it and all for $1000. Call that the best investment of all time.

        All I can say is WOW. Zuckerberg is history. Might take a few years with all the Legal wrangling and Zuckerberg is going to get his ass sued for failing to disclose this contract when he took the VC money and he might even end up in Jail if the VC guys can convince the government to prosecute for fraud.

        • Re: (Score:3, Interesting)

          by quadelirus (694946)
          My question: why didn't this come out like, say, 5 years ago instead of a full 7 years after facebook's launch?
          • by Culture20 (968837) on Wednesday July 21, 2010 @11:45PM (#32986426)

            My question: why didn't this come out like, say, 5 years ago instead of a full 7 years after facebook's launch?

            As people pointed out in a previous story: Ceglia apparently had no reason to believe Zuckerberg was acting in bad faith until Zuckerberg tried to sell something Zuckerberg didn't own. Once that occurred, Ceglia could pounce (and did, like a three toed sloth, but well within the statute of limitations).

          • Re: (Score:3, Insightful)

            People keep asking that, but what I want to know is - is there a particular reason why he should have?
  • Is this not a fairly routine tactic?
  • Company Hating (Score:5, Insightful)

    by phantomfive (622387) on Wednesday July 21, 2010 @07:07PM (#32984548) Journal
    In all my years of Microsoft hating, Oracle hating, IBM hating, closed-source hating, I have never wanted a company to fail so much as Facebook. It is quite surreal to me, a visceral, deep-set dislike of the company and everything it stands for. It is reflexive, not even intellectual. I just can't stand them.

    I thought Microsoft would be the worst, because I went through years when they were truly evil, but even at that time I never really hated Bill Gates. He's still kind of a geek, and he did work hard, even if he had an over-burdened competitive streak. And Ballmer, while he is a gorilla, he is just a gorilla. He does plenty of things that are entertaining.

    But Zuckerberg is just a douche. He is like the lowest of the low, he stole the idea for the company, he doesn't care about his customers, he doesn't care about his partners, he got lucky, and he has absolutely no redeeming qualities. If Bill Gates hadn't gotten lucky working with IBM, he would have started another company and been successful, although maybe not to the same degree. That's just what kind of person he is. Mark Zuckerberg is the kind of guy who takes everything that is bad about investment bankers and brings it into the programming world. He should go back to banking where he belongs. There are lots of douches there. He would fit right in.
    • Re:Company Hating (Score:5, Insightful)

      by Actually, I do RTFA (1058596) on Wednesday July 21, 2010 @07:21PM (#32984654)

      If Bill Gates hadn't gotten lucky working with IBM, he would have started another company and been successful, although maybe not to the same degree.

      Microsoft was doing okay without DOS. Not anything like what they became with it, but Microsoft, and MS-Basic would have at least left Gates comfortable.

      Gates was able to build a strong enough business to await a good opportunity. And then seize it. As a person, I respect him.

    • So he'd be a "Zuckerbag" then?

  • Google Me (Score:5, Interesting)

    by Enderandrew (866215) <enderandrew&gmail,com> on Wednesday July 21, 2010 @07:08PM (#32984558) Homepage Journal

    The average user doesn't know how much of a dick Zuckerberg is. But this trial will expose that to more of the public, as will the upcoming Fincher movie.

    And frankly Zuckerberg's history of screwing over other early partners, and intentionally screwing his users by constantly changing privacy settings to expose users will come out as evidence that he sought to exploit Ceglia and never honor the contract.

    In the meantime, Google is putting together a Facebook killer. And the killer feature will be that your Mafia Wars and Farmville accounts will transfer over to this new social network, Google Me.

    • Re: (Score:3, Funny)

      by interval1066 (668936)

      "...this new social network..."

      Then, almost at once, all the users of social neworking, games, apps, all of it, almost to a man, woke up, and yelled "I've been spending 10 years of my life doing what????

    • Re: (Score:3, Insightful)

      by OverlordQ (264228)

      In the meantime, Google is putting together a Facebook killer. And the killer feature will be that your Mafia Wars and Farmville accounts will transfer over to this new social network, Google Me.

      Umm, you do know who they're working with right? Zynga, the other Facebook company that doesn't care about users.

      • Re: (Score:2, Interesting)

        by Anonymous Coward

        Umm, you do know who they're working with right? Zynga, the other Facebook company that doesn't care about users.

        That's just bullshit.

        Zynga has worked diligently to improve it's customer service. If you're referencing the "scamville" situation that was reported by TechCrunch last year, I'd suggest you read the follow-up articles also posted by TechCrunch praising the approach that Zynga took in completely removing those offers from all games until they were able to gain better control. In fact, one of those offer companies is likely to go out of business soon because they recently lost out on a facebook bid to be th

    • by Culture20 (968837)
      I tried Googling you, but I'm having trouble figuring out how you tie in to the new Google social network. /Abbott
  • Nice article.

    Of course, seeing as most defends want to have their cases thrown out, it's not really news.

  • by hadesan (664029) on Wednesday July 21, 2010 @07:18PM (#32984620)
    Mark, come on man - give the man his due - it's only 84% of the stuff you ripped others off for...
    • by blair1q (305137)

      Minus the part he already sold to his other investors, minus what they'll sue him for once the judge takes some of that back to give it to Ceglia...

      Zuckerberg could end up deep in debt after this.

  • by John Hasler (414242) on Wednesday July 21, 2010 @07:35PM (#32984790) Homepage

    It's a contract dispute between two individuals. The outcome will depend on the facts of the case and the judge's interpretation of the contract. No rights involved, except for the plaintiff's exercise of his right to sue.

  • by sexconker (1179573) on Wednesday July 21, 2010 @07:43PM (#32984850)

    I'd love to submit an amicus curiae brief to some random trial and just copy paste www.timecube.com .

    If it's part of the court record, they've got to read it, right?

    • by Culture20 (968837)

      I'd love to submit an amicus curiae brief to some random trial and just copy paste www.timecube.com . If it's part of the court record, they've got to read it, right?

      +4 Corner Simultaneous 4-Day Informative
      EVIL /. Moderators block and suppress www.timecube.com

  • Why isn't Zuckerberg claiming the contract is a forgery?

    • by msauve (701917)
      Because perjury is a criminal offense? Do you think he wants to give up $xx billion, control of Facebook, and pick up soap in prison for up to 5 years?
    • Why isn't Zuckerberg claiming the contract is a forgery?

      I think they're heading in that direction. Facebook has asked to see an original copy of the contract and Ceglia's lawyer told them to "come visit my office and I'll show it to you." Sounds fishy.

      • by msauve (701917)
        It's fishy that they don't want to let a document which may be worth billions of dollars out of their control/sight? Where's Zuckerberg's copy? Facebook's lawyers can look at that. Zuckerberg knows whether or not there was a contract, and if he knew there wasn't one, they wouldn't delay in saying so. They've already admitted to a business relationship. Lacking a Zuckerberg copy which differs from the one in the filing, it will be hard to argue/prove it was modified after the fact. Hence, the Chewbacca defen
  • by Tanman (90298) on Wednesday July 21, 2010 @08:09PM (#32985014)

    Sally: TEACHER, I told Billy he could have my crackers yesterday if he'd give me his desser TODAAAAAAAY!
    Teacher: Is that true, Billy?
    Billy: But, but, I didn't KNOW my mommy was gonna make BROWNIES. SALLY just gave me an oreooo!
    Teacher: Now Billy, you made a legally binding agreement with Sally. I'm afraid that I will have to enforce the terms of the contract, as Sally did uphold her end of the bargain. If you thought you might be getting a brownie today, then you should have just waited and shown some restraint and considered any future ramifications from your actions.
    Billy: WAAAAAAAAAAAAAH!

    • by BitterOak (537666)

      Sally: TEACHER, I told Billy he could have my crackers yesterday if he'd give me his desser TODAAAAAAAY!

      It is a good analogy, but what is a "desser"? At first I thought you meant to say "dresser", but kids don't usually trade in furniture. An Xbox-360 or something similar would make more sense here.

  • by CptNerd (455084) <adiseker@lexonia.net> on Wednesday July 21, 2010 @09:09PM (#32985446) Homepage

    "Your Honor, I demand this contract be thrown out as evidence!"

    "On what grounds?"

    "On the grounds that it incriminates my client!"

  • "Facebook attorney Lisa Simpson acknowledged on Tuesday that Zuckerberg and Ceglia had worked together on the street-mapping website but said the contract submitted by Ceglia was full of "inconsistencies, undefined terms and things that don't make sense."

    Um, as if that means much. If the contract is otherwise legally correct, this is not the defense I would want to be counting on...

    "We have serious questions about the authenticity of this contract," Simpson told U.S. District Judge Richard Arcara. "What th

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