ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Tuesday, April 19, 2011

Defeat Is an Orphan, but Facebook Has a Thousand Fathers

Zuckerberg Just a week ago, the Ninth Circuit ruled in favor of Facebook, finding the parties bound by a 2008 settlement agreement.  But before you can say Winkelvosses, Facebook is back in court, this time in the Southern District of New York, being sued by yet another claimant to the title of Facebook co-founder.  As reported in the New York Times, Paul Ceglia claims that the guy who claims to have founded Facebook -- no, not the Winklevosses and not Eduardo Saverin, but Mark Zuckerberg (pictured) -- was working for Ceglia at the time he developed the idea for what was then called "The Facebook" and that Zuckerberg agreed to share profits from the venture 50/50 with Ceglia.  

The Times provides the following additional details about the case:

  • Ceglia alleges that a work-for-hire contract that he entered into with Zuckerberg when the latter was 18 entitles Ceglia to at least a 50% share in Facebook;
  • The suit is based on a 2003 written contract and an exchange of e-mails;
  • Asked why he waited until 2010 to claim an ownership stake in Facebook, Mr. Ceglia told Bloomberg News that he had forgotten about his contract with Mr. Zuckerberg until he was looking through old files so that he could find assets with which to pay customers of his wood-pellet service and discovered that he owned a majority stake in a multi-billion dollar business;
  • Ceglia first filed his complaint last year, but now he has filed an amended complaint and is represented by DLA Piper;
  • Robert W. Brownlie, a partner at DLA Piper, has never seen the original documents on which Ceglia's claims are based but he warns that “Anyone who claims this case is fraudulent and brought by a scam artist will come to regret those claims”;
  • Facebook claims that the e-mails are fabricated and the case a fraud;
  • In 2009, Ceglia was arrested, charged with fraud and had his environment-friendly wood pellet business shut down by then NY State Attorney General Andrew Cuomo.


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