Suit Alleges Site Was Part of 2003 Project
6:00PM ET July 22, 2010
Contributor : Rocky Williform
A Rocky Williform Company
Facebook founder Mark Zuckerberg signed a contract seven years ago granting a New York businessman an ownership stake in Zuckerberg’s upstart web company that may be real and binding, according to a Facebook lawyer. The lawyer, Lisa Simpson, acknowledged Tuesday in federal court hearing, that “Mr. Zuckerberg did have a contract with Mr. Ceglia,” Facebook lawyer Lisa Simpson told U.S. District Judge Richard Arcara in Buffalo, N.Y., according to a Bloomberg report. “Whether [Zuckerberg] signed this piece of paper, we’re unsure at this moment.”
Plaintiff Paul Ceglia sued Zuckerberg in a local court late last month, alleging that he hired Zuckerberg in 2003 to work on two separate business ventures: the first was developing and maintaining Web software for “the StreetFax Database,” according to a copy of a contract filed by Ceglia with the court; and the second was “continued development” of an already-in-progress project “designed to offer the students of Harvard university access to a wesite [sic] similar to a live functioning yearbook with the working title of ‘The Face Book.’”
Ceglia’s attorney, Terrence Connors, said that his client hired the then-18 year-old Zuckerberg to work as a coder on a street-mapping database Ceglia hoped to create. The alleged contract between the two parties covered that work and an investment in a side project Zuckerberg said he was developing.
That side project was Facebook, which is now the largest networking site online. Investors include the former CEO of Paypal, who invested an initial $500,000 for $5% to get the project off the ground back in 2004. His interest is worth a reported $1 billion today. $60 million was invested by a Hong Kong billionaire. Microsoft invested $240 million for $1.6% equity stake, Digital Sky Technologies, a Russian investor, recently invested a total of $500 million of which $200 million will be in exchange for a 1.96% of stock and the remaining $300 million wil be in the form of employee stock buy backs. But, ironically, if Ceglia wins his suit, it would be Zuckerberg who could be forced to relinquish 50% ownership of his now-iconic brand.
Facebook has challenged both the facts of Ceglia’s case and the timing of it. Ceglia’s alleged contract is dated April 23, 2003 — several months before Zuckerberg is believed to have started work on Facebook’s predecessor projects. The domain name “thefacebook.com” was first registered in January 2004. A Facebook company spokesman said that “The plaintiff has not produced the original of the alleged agreement for anyone, including the court. We have serious questions about the authenticity of the document and, assuming an original exists, we look forward to expressing our opinion about it once we see it.”
This isn’t the first time Zuckerberg has faced litigation in regards to Facebook ownership. In 2007, three founders of rival social media platform ConnectU sued Mark Zuckerberg for fraud, copyright infringement and misappropriation of trade secrets, claiming the founder stole their ideas while they were students at Harvard. Zuckerberg’s net worth is currently estimated at $4 billion.
]]>
