Facebook Asset Freeze Struck Down In Federal Court

moneyFacebook’s assets are no longer on legal lockdown since a New York Judge struck down a temporary restraining order against the company on Friday. It was pretty unbelievable news that surfaced last week: a man claimed to have signed a contract in 2003 with Facebook owner Mark Zuckerberg to build a “live functioning yearbook with the working title of ‘The Face Book.'”

Pursuant to the poorly worded, typo-ridden agreement and a $1,000 check, Paul Ceglia claimed he was owed 84% ownership of Facebook, Inc. In what seemed to be a rash decision with little legal basis, New York Judge Thomas Brown issued a temporary restraining order freezing the company’s assets for the time being while the case was advancing.

Facebook moved to have the case removed to federal court and there launched an attack on the TRO and the case in general, as it seems to have been brought outside of New York’s six year statute of limitations on contract disputes. While the restraining order has not yet been completely removed, U.S. District Court Judge Richard Arcara granted the company’s request on Friday for immediate relief until a hearing can be held on Tuesday to discuss dissolving the order entirely. Long story short, Facebook’s assets are now unfrozen – just in time for their 500 millionth friend celebration.

Chances are slim that Judge Arcara will do anything other than dissolve the order tomorrow because it seems that not all the legal requirements were met for the order to issue in the first place. One element necessary for a TRO is irreparable injury, and it is unclear how a man who sat dormant on a contract dispute for nearly seven years could all of a sudden have the immediate necessity to freeze the entire company’s assets for fear of irreversible injury to him. Similarly unclear is how he arrived at the alleged 84% ownership stake. It will certainly be interesting to see how this case turns out. Stay tuned for news on tomorrow’s hearing.