Facebook Wants Ownership Case Thrown Out

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.'"

Comments

like wookies

[lostros]

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

Re:like wookies

[Bieeanda]

Worse, it's the Chewbacca offense! The judge will have to cede the 84%, if he doesn't want to have his arms pulled out of their sockets!

make sense?

[dAzED1]

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?

[Fnkmaster]

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?

[Surt]

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:make sense?

[Beardo the Bearded]

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?

[neoform]

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"..?

Re:make sense?

[phantomfive]

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:make sense?

[TooMuchToDo]

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?

[blair1q]

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...

Re:make sense?

[blair1q]

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:make sense?

[HarvardAce]

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.

Re:make sense?

[HarvardAce]

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:make sense?

[BitterOak]

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?

[Anonymous Coward]

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?

[zippthorne]

What good would that do? He can owe all he wants. There wouldn't be assets under his control to cover that debt.

Re:make sense?

[zippthorne]

Erm.. Ceglia is Saruman. He doesn't want to destroy the precious. He wants to have its power for himself.

Re:make sense?

[lordlod]

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?

[schmidt349]

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?

[LordKronos]

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/

"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?

[rtb61]

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, Dumb fucks" somehow that psychopathic statement seems to be really ring true, perhaps Facebook can use it as their new marketing meme. I really have to think that people, companies and organisations looking to align their image with Facebooks, should step back and take a long hard think about whether it is really appropriate. Anyone just like any other youth driven fade it will inevitably fade to be replaced by the new hot social site.

Perhaps a new open social network site, hosted and linked across many ISP's, with open source code with clear locked into client agreements with pre-defined and limited revenue methods can be created. A place where clients and service providers can safely mix, all absent "They trust me, Dumb fucks".

Re:make sense?

[SheeEttin]

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

I don't understand this analogy. I've never heard of these kinds of cars!

Re:make sense?

[djlowe]

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

Re:make sense?

[Tom]

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.

Re:make sense?

[TheLink]

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".

Re:make sense?

[Kevin Stevens]

HarvardAve pointed out a link with a copy of the filing below- which includes a copy of the signed contract.

The contract seems to be a typical one lifted from a form book, with a few small hand written amendments that are illegible in the pdf. It is signed by both parties, and the terms seem very clear- I was under the impression this was drafted by ceglia himself.

I am now changing my position- unless this is an outright forgery, this claim seems 100% legit- they even state the name as "the facebook."

It appears he has a legitimate ownership stake in Facebook.... WOW.

Doesn't matter

[Monkeedude1212]

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:Doesn't matter

[pete-classic]

Ah, but you're forgetting the Chewbacca Defense!

-Peter

Re:Doesn't matter

[DragonWriter]

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 evidence of an actual agreement on the essential terms of the exchange.

SO... How do you think it will turn out?

[drsmack1]

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!

Re:SO... How do you think it will turn out?

[phantomfive]

Steady decline in user satisfaction......and steady increase in userbase size and advertising revenue. People may not be satisfied with Facebook, but they will still use it. And I say that in all sadness, wishing they wouldn't.

Full of things that don't make sense ...

[Anonymous Coward]

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.

that's what you get

[vuffi_raa]

when you write a contract while stoned and in college.

Re:that's what you get

[Surt]

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

Company Hating

[phantomfive]

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

[Actually, I do RTFA]

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.

Re:Company Hating

[mirix]

He's the kind of guy that has actually stated "Fuck the users". Sure sounds like a real nice guy.

Fuck him and facebook.

Re:Company Hating

[DogDude]

I'd call him a douchebag because he's just another dot-commer who builds unprofitable, unsustainable "businesses" off of other people's money. He doesn't create anything of any value. All he does is spend other people's money and pays himself as if he deserves it.

The investors are greedy, stupid people who deserve to lose their money, as well, but that's another story.

Re:Company Hating

[retchdog]

http://www.businessinsider.com/well-these-new-zuckerberg-ims-wont-help-facebooks-privacy-problems-2010-5

Re:Company Hating

[phantomfive]

The fact that he's a douchebag is apparent from what he is done. Read some of his chat transcripts that have come out on the internet and see if you disagree. He screws everyone around him. He sucks. I don't need to character-assassinate Zuckerberg because he's done it to himself with his actions. It has nothing to do with being Jewish or graduating from Harvard. He fits in the investment banking world because the investment banking world is full of douches who like nothing better than to rip each other off. That is how the banking world works.

As for the rest, I don't know why you think I am generalizing about young entrepreneurs in general. I am not. I respect success. But not when it comes from ripping people off.

Re:Company Hating

[Culture20]

Don't get me wrong, I think Zuckerberg is a Class-A douchebag, and I hope Facebook burns, but I think it's amusing that you -- and all Slashdotters here -- would say word-for-word what Zuckerberg did, with no regrets.

Look, Slashdotters think they're Aspies, not Sociopaths. When I refer to my users in the words Zuck used, I don't also snicker and say "they 'trust' me". I call my users dumb ^@$& because they screw something up, but then I fix it for them because I care about them (the job actually does come second). Zuckerberg was ridiculing people for exhibiting a good behavioral trait: trust. He thought it was funny that he could abuse^Wrape that trust. That's a mental illness.

Google Me

[Enderandrew]

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:Google Me

[interval1066]

"...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:Google Me

[OverlordQ]

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:Google Me

[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 the lone offer provider of facebook credits. (see link here)

Zynga certainly hasn't been a perfect company in terms of user relations, but they have been one of the very few who have publicly acknowledged their problems and worked to get them corrected.

Re:Google Me

[BitZtream]

Wow ...

I got a bridge over the ocean in Arizona, right on the beach ... I'll sell it to you for $1 since you seem like such a nice guy. Its right next to the nice guys at Zynga.

Deal with the devil - time to pay up...

[hadesan]

Mark, come on man - give the man his due - it's only 84% of the stuff you ripped others off for...

What's this got to do with "my rights online"?

[John Hasler]

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.

Re:What's this got to do with "my rights online"?

[blair1q]

You have the right to watch Facebook's ostensible founder go up in flames, online.

Re:What's this got to do with "my rights online"?

[selven]

Due to Slashdot's lack of a "law" section, all legal stories get thrown into YRO. Unless they relate specifically to Apple, Microsoft, or some other category, where else could they go?

Things that Don't Make Sense

[sexconker]

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?

Re:Where's the Beef?

[msauve]

Here you go. Courtesy CNN.

The contract starts on page 11.

Schoolyard arguments . . .

[Tanman]

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!

Re:Be interesting to see the contract

[HarvardAce]

The contract is included in the lawsuit, available here: http://i.cdn.turner.com/money/2010/07/13/technology/facebook_lawsuit/facebook_filing.pdf

"Your Honor, I demand..."

[CptNerd]

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

"On what grounds?"

"On the grounds that it incriminates my client!"

Re:Be interesting to see the contract

[rahvin112]

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:Be interesting to see the contract

[quadelirus]

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

Re:Be interesting to see the contract

[Culture20]

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).

legal nonsense

[popo]

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.

Re:Be interesting to see the contract

[Richard_at_work]

People keep asking that, but what I want to know is - is there a particular reason why he should have?