A man has filed suit in the Supreme Court of New York’s Alleganey County alleging that by virtue of a 2003 contract with Mark Zuckerberg, Facebook’s founder he owns an 84% stake in the billion dollar social networking business.
Paul D. Ceglia is seeking ownership and monetary damages based on an alleged contract signed on April 28, 2003, in which he agreed to develop and design a website in exchange for a $1,000 fee and a 50% stake in the product. He also claims there was another provision in the contract allowing him to claim an additional 1% ownership interest for each day after January 1, 2004 that passed until the site was completed.
We obtained a copy of the contract (subscription required), attached to the complaint as Exhibit B, which says it is, “for the purchase and design of a suitable website for the project Seller [Zuckerberg] has already initiated that is designed to offer the students of Harvard university [sic] access to a wesite [sic] similar to a live functioning yearbook with the working title of ‘The Face Book’.” It states the project due date and calls for “additional 1% deduction for each day the project is delayed beyond that point.” The date on the contract does not exactly match up with other accounts of Facebook’s creation. Zuckerberg didn’t register the domain www.thefacebook.com until January 2004 but there was a predecessor to Facebook called “Facemash” which was started in October of 2003.
Presiding Judge Thomas Brown issued a temporary restraining order (TRO) a few weeks ago prohibiting any the transfer or sale of any assets of Facebook, Inc. until the case has been resolved. Papers associated with the TRO were most likely the ones served to Zuckerberg while at a media lunch event in Sun Valley, Idaho last week. Zuckerberg’s legal team has moved to vacate (throw out) the TRO for lack of proof of irreparable harm, which is one of the necessary elements of such an order. They have also moved to have the case transferred to Federal Court.
A spokesperson for Facebook said, “We believe this suit is completely frivolous and we will fight it vigorously.”