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Man claims to own 84% stake in Facebook - judge grants TRO in his favor
- Vivtek 16y agoSee, this is just the kind of twist you wouldn't be able to sell in fiction. It's just as implausible as WWII!
- troygoode 16y agoThe date of the contract appears to conflict with previous accounts of the creation of Facebook. Mr. Zuckerberg built a predecessor to Facebook called Facemash in October and November 2003, but Mr. Zuckerberg didn't register the domain thefacebook.com until January 2004. In 2009, New York's Attorney General Andrew M. Cuomo accused Mr. Ceglia of defrauding customers of his wood-pellet fuel company, according to a news release from the Attorney General's office. The state claimed that he took more than $200,000 from consumers and then failed to deliver any products or refunds. That case is still active. Sounds like this is a bogus case. I can't imagine the pit in Zuckerburg's stomach right now it were true though...
- rokhayakebe 16y agoIf this was true, someone would agree to a settlement or someone would disappear.
- baddox 16y agoSurely Zuckerburg would have at least thought about that old contract if it were real. Perhaps he's been paying him to keep quiet but the guy's finally pissed and going public?
- fleitz 16y agoZuckerberg has nothing to worry about, everyone knows the he got the code from ConnectU. On a more serious note, this screams Doctrine of Laches (sleeping on your rights). It's going to be rather difficult to have missed the emergence of Facebook and with an 83% share why he had not been involved in any of the VC rounds, or any decisions in a company worth $15 billion.
- rbanffy 16y agoBut this guy says it's his design... It could be that Zuckerberg took the code from ConnectU and the design from this other guy to make Facebook.
- code_duck 16y agoHow about this guy? He says he was ripped of by Zuckerberg in a similar fashion. He had a site colloquially known as, guess what, 'the Face Book', and.... http://www.huffingtonpost.com/aaron-greenspan/the-end-of-the-facebook-e_b_575921.html http://www.huffingtonpost.com/aaron-greenspan/the-end-of-the... From Wikipedia, "Though the two entrepreneurs decided to work on their respective projects independently, they frequently discussed technological aspects of houseSYSTEM related to the Face Book, as well as Zuckerberg's latest project, about which he was secretive.[162] On January 11, 2004, shortly after using the Universal Face Book on houseSYSTEM, Zuckerberg registered the domain name "thefacebook.com" independently."
- fleitz 16y agoYes, but this is a question of ownership of a corporation. I doubt he has any claim to whatever Facebook's legal entity is. He may have claims for copyright violations if the contract included ownership of the code, etc. Which the contract appears not to include. He may have other claims but I doubt he has a straightforward ownership claim over the legal entity. My reason for thinking this is the amount of VC that went into Facebook and the common sorts of IP issues that VC's regularly deal with it's extremely likely a new corporation was created and Zuck's assets transferred to that company. Zuck may have transferred assets illegally to that corporation (copyrights, domains, etc) which would create a legit claim, but it's unlikely that he can prove a straightforward 83% ownership. Even if he can prove that it's going to be very hard to overcome the subsequent VC rounds that would have reduced everyone's equity stake.
- anigbrowl 16y agoYeah, but his actual claim is that he hired Zuckerberg to develop it. He paid $1,000 up front on the understanding that once it was done on time, they'd have a 50/50 ownership interest, or more in proportion to how long overdue the project went. According to this guy, it got done, but late, and as a result he owns 84% and Zuckerberg 16%, and Z. then went on and transformed the business several times into today's Facebook Inc., as if he owned it 100%. But he never asserted his claim until now, so unless he's been in a coma or something, his failure to act was an implicit waiver of rights. It's more like a trademark than a copyright situation; undefended trademark infringements are construed as abandonment after a while.
- mortenjorck 16y agoWe know stranger things have happened on a smaller scale: http://sivers.org/mistake http://sivers.org/mistake But given the case currently pending against Mr. Ceglia himself, I'm pretty skeptical about the whole thing.
- Aaronontheweb 16y agoIs it just me or did Zuckerburg build Facebook on a foundation of ill-advised contracts or what?
- aresant 16y agoNo doubt reflective of nearly any 19 year old web developer's confused web of NDAs / Non-Competes / etc when doing contract work . . .
- micrypt 16y agoIt sounds like "The Social Network" might be getting a sequel. :)
- waterlesscloud 16y agoThe fact that a related movie is coming out no doubt plays a role in the timing.
- anigbrowl 16y agoI uploaded the complaint (only) on Scribd, which includes the contract as an exhibit. It's hard to read (as a poor quality photocopy) but seems superficially credible - that is, there are signatures supposed to be Zuckerberg's on the contract and a receipt for cashed check, which could be checked for authenticity. As to whether the contract is enforceable or even valid, I have no opinion. I'm having considerable difficulty just reading it and don't know enough about contract law to evaluate it. Even if it is, I imagine Facebook would respond that the suit is equitably estopped by laches (unreasonable delay in enforcement of a claim). Edit: they do - 2nd link, 2nd last paragraph. http://www.scribd.com/doc/34239119/Ceglia-v-Zuckerberg-complaint http://www.scribd.com/doc/34239119/Ceglia-v-Zuckerberg-compl... http://www.scribd.com/doc/34240120/Ceglia-v-Facebook-Motion-for-Dissolution http://www.scribd.com/doc/34240120/Ceglia-v-Facebook-Motion-...
- jeromec 16y agoPerhaps grellas might shed some light on the laches issue, but aside from that I think this is legit. First, I notice the response from Facebook was that this is "frivolous" not bogus, which implies to me that Mark did sign that document. Second, from scrutinizing the hardly legible document it appears the claims are accurate, including the 1% ownership transfer to "Purchaser" for every day of delay in project completion after January 1, 2004. Last, the contract timeline does make sense to me. It sounds like a very young college kid in 2003 with his mind on many things, including a hobby project to connect students met a more experienced business man who wanted some street software developed. The business man recognized the value in the hobby project already begun by Mark which he loosely referenced as "The Face Book". The business man then covered himself to be well-positioned legally if this hobby took off. He paid Mark 1K for it (and another 1K for the street software), explaining Mark would still own 50% of "The Face Book" in case it did become more valuable... All hypothetical, but not hard to imagine.
- deleted 16y ago[deleted]
- anigbrowl 16y agoTrue, but laches is is important. Given that I'm not a lawyer... FB must show laches applies, but this should be easy. It requires showing knowledge (obviously that existed, as Ceglia knows he had a contract), unreasonable delay (FB isn't hard to find), and prejudice (delay avoidably made the problem worse). Probably Ceglia just wants to be paid to go away. Edit: on reflection, all of that applies to Facebook, the company. Ceglia is also suing Zuckerberg as an individual, presumably for 84% of the value of his stake. I'm less sure of how that claim would fare - it's just as late, but is it prejudicial to Zuckerberg's interests? (Just wondering from a purely theoretical standpoint.)
- protomyth 16y ago"but getting a 50% stake in the product. The contract stipulated that Mr. Ceglia would get an additional 1% interest in the business for every day after Jan. 1, 2004, until it was completed." Wouldn't you structure it so he would lose 1% for every day late after Jan 1,2004?
- anigbrowl 16y agoNo. The deal here is that ownership interest is gained in lieu of prompt performance.
- bena 16y agoThe article isn't written too clearly on this matter. Ceglia bought a 50% share for $1000 and capital to pay for domain and hosting expenses with the stipulation that he would get an additional percent each day after January 1st 2004 that it was late (and presumably it was 34 days late). Zuckerberg was the developer, Ceglia was the wallet.
- protomyth 16y agono kidding on the clearness of the article, I thought Zuckerberg was the wallet and thought what a demented contract.
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- startuprules 16y agoWhenever I see Mark Zuckerberg in public in front of all his peers, he is always so frightened and insecure. Perhaps in the back of his mind, he's always thinking about the fact that he just has to last a bit longer so he can get away with not one, but two cases of theft (ConnectU and nowthis). Or perhaps today is the day where the world sees him for who he really is: a small time crook who got real lucky, and gets to sit in the private dining room in the back of the italian restaurant with the mafia bosses.
- ryanwaggoner 16y agoOr maybe he's just shy and you're just jealous? Nah, it's probably the mafia boss thing.
- DilipJ 16y agoYes, I think I read a story somewhere that during one of the VC rounds he was so nervous about the terms that he ended up curled up on the floor of the bathroom?? Anyway, I think he seems like an all around decent guy, and I admire anyone who has the guts to turn down a billion from Yahoo (especially at his age, and on his first business!) That shows vision and confidence, so I think he's the perfect CEO for Fb (which will likely one day have a market cap greater than Yahoo).
- melvin 16y agoHe's clearly way out of his league, but then, has managed to pull it off... so maybe not. I see him as extremely sleazy - just the type of person who I hate to see become successful. Facebook is the prime example of a company that needs a real CEO, with actual business experience and ethics. Not one of those MBA types who is actually a complete idiot, though. I guess it would be very hard to find the right person.
- johnl 16y agoThis is why you want to deal with a ycombinator from the getgo. Poking around and signing contracts to get some momentum going could end up biting you in the leg down the road.
- robryan 16y agoEven if it was a valid contract I can't see how you would be able to let everyone think they own certain amounts of a company for years without any input then make a claim later. Doesn't make logical sense but then the legal system is counter-intuitive at times.
- nphase 16y agoI wonder if this will make an appearance in the new Facebook movie. puke
- gwern 16y agoNo; the script is already set in stone (it's floating around the Internets if you want to read it - it's actually not as terrible as it could be), and October is not very far away; I'd guess filming is already done.
- paulnelligan 16y agoOne thing I'm asking myself is 'why the hell did he wait so long???' for a minute there I was envisioning the fall of facebook and what it would mean for everyone - you mean we get to reinvent social networking???!!, without zuckerberg???!!!