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The most popular social-networking website just hit a major milestone: 500 million users. It celebrated this milestone by launching a new application, Facebook Stories. Few people would disagree that Facebook has come a long way since its humble beginnings. I remember joining back when membership was limited to people with valid .edu email addresses. Maybe that will be something we can tell our grandchildren along with how we remember when cars actually used gasoline to drive, the Y2K scare, etc.
But with success, so often comes litigation. Recently, the actual ownership of Facebook has come into question. Paul Ceglia claims that he contracted alleged founder, Mark Zuckerberg, to do some development on two projects while he was a college student. According to the complaint, Zuckerberg was hired “for the continued development of the software program, and for the purchase and design of a suitable website for the project. Seller [Ceglia] has already initiated a site that is designed to offer students of Harvard University access to a wesite [sic] similar to a live functioning yearbook with the working title, ‘The Face Book.’” Through this contract, the plaintiff claims to be owed an eighty-four percent interest in Facebook, Inc.
One might think that these crazy claims come along every other day or so, and that this lawsuit is nothing out of the ordinary. There is at least one judge that disagrees, and has in fact granted an injunction on the basis of this complaint. This injunction was later overturned, but it seems that there is more to the story than just an everyday frivolous lawsuit filed against a very large entity. To that point, Facebook attorneys actually admitted that Zuckerberg may have signed this contract!
Even if there actually was a signed agreement between them that would have granted the plaintiff an ownership interest in the company, Zuckerberg may have a strong argument that it is not enforceable — the statute of limitations. The alleged contract was entered into in 2003. Even without knowing the local law, I suspect seven years is a very long time for a contract claim to still be valid. Perhaps Facebook could bring the old common law concept of latches back into the modern age.
Whatever the ultimate merits of this claim, Facebook should probably get it taken care of soon. With Zuckerberg talking about taking Facebook public through an IPO, a claim of eighty-four percent ownership of the company is not a good thing to have hanging out in court. Anyway, I’m off to waste some time stalking my “friends” on Facebook.
– Josh Lee
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