I can't read that, I just get a gray box (and trying on Windows gives me a little red 'x' where the corner of the box was).
But, I thought there was a list of things that are normally works for hire (without that being explicitly specified), and a list of things that are allowed to be specified as works for hire, and that software isn't on either list?
Other than the spot where someone has written in something about a "web designer" this looks like the most general contract I've ever seen. This could be from anything. I would find it hard to believe that some judge is going to give a guy billions of dollars over this.
With Facebook now taking the "we don't know if he signed it, but if he did it's invalid anyway!" argument it looks like Zuckerberg may indeed have put pen to this paper.
My guess would be either he assumed it was contracting boilerplate and didn't read it properly (based on the memories of my behavior in my early 20's, fairly likely), or just skipped over the single paragraph with criminally bad English that referred to the purchase and design of "The Face Book".
It is a lawyer's job to put forth every argument that can make their client win. Even if the lawyer believes that the client didn't sign, they can't stand on the truth because the judge may not believe them. So they have to argue both sides of every disputed fact. So they say that they don't think our client signed. But even if he did, it is too late to bring this case so our client still wins. That way no matter which version of the facts the judge accepts, they can win.
I don't agree with that. If the lawyer knows for certain that Zuck did not sign they should just say he did not sign. That will not prevent them from making arguments in the alternative, such as "even if he signed, the contract is invalid on other grounds." While these kind of arguments may seem a little disingenuous to the ordinary person, they are accepted and made in the courthouses all the time.
I think the best argument you can make for the possibility that Zuck did not sign this contract is that he did not sign it, but does not want to be brought to the witness stand for some reason, so he has told his lawyer not to make the validity of his signature an issue of contention but to try to attack the contract on other grounds.
I don't agree with that. If the lawyer knows for certain that Zuck did not sign they should just say he did not sign. That will not prevent them from making arguments in the alternative, such as "even if he signed, the contract is invalid on other grounds." While these kind of arguments may seem a little disingenuous to the ordinary person, they are accepted and made in the courthouses all the time.
I'm having trouble seeing what your point of disagreement is.
From what we both said, if the lawyer believes or knows that the client did not sign, the lawyer should make that argument. But the lawyer will also make arguments in the alternative, arguing that even if the client did sign, they should still win the case.
I'm not a lawyer but from the last time I had to deal with contracts, I recall that contracts with irregular or completely unjustified terms actually can be thrown out by the courts.
As I remember, US residential agreements are quite restricted because the average renter isn't expected to have any legal sophistication. Commercial lease are much less restricted because a commercial leaser is expected to more sophistication.
In any case, Rumpelstiltskin's contract probably wouldn't be honored in a court of law.
This is why almost any contract you sign will have a clause stating that if one section of the contract is found to be invalid, that it does not invalidate the whole contract.
They can put forth any argument they want to the press, but they can't make an argument to the court that they know is frivolous or not true. It's Rule 11(b) of the Federal Rules of Civil Procedure:
The scanned document I've seen does have a signature on it and Zuckerberg's history with Ceglia should give some picture of whether that signature is authentic.
The signed contract seems to be the main evidence Ceglia is counting on - earlier in the case he said allusion to surprising people when the evidence comes.
So it seems plausible the signature is valid though this naturally doesn't mean Ceglia's suit will succeed.
I thought this was just a boilerplate work for hire contract, but on pg 11 it surely says:
Second is the conditioned development of the software, program and for the purchase and design of a suitable website for the project Seller has already initiated that is designed to offer the students of Harvard University access to a website similar to a live functioning yearbook with the working title of "The Face Book".
It is agreed that the purchaser will own a half interest (50%) in the software programming language and business interest derived from the expansion of the service to a larger audience.
And goes on to say he gets 1% more of the business every day its not completed after Jan 1 '04.
Thats a pretty valuable piece of paper this guy has held onto for the last six years, their lawyers will make a lot of money on this if its not a forgery.
Receiving stolen property requires quite a few things ( like reasonable suspicion the items are stolen ) for that to be an option for charges. Stockholders clearly don't have that.
I personally doubt stockholders will lose a single share no matter what happens.
If this contract is real, this is bad news for Zuckerberg.
Considering that his lawyers are "unsure" he signed the contract, this is basically an admission that the contract looks valid at first glance, and that the lawyers are probably spending day and night trying to get it dismissed on a technicality, or hoping it is a forgery.
It will also be interesting to know if people here think Ceglia deserves those Facebook shares. Many people here are investors and would probably side with him, but others have expressed the sentiment that he provided a negligible amount of money and therefore contributed very little to the success of Facebook.
>It will also be interesting to know if people here think Ceglia deserves those Facebook shares.
That's what interests me most about this. I'm assuming this will come to some settlement that won't destroy facebook, and will probably give this guy some money. I'm curious about the ethics involved. Is contract law so inviolate that most people here would advocate honoring it?
Unlike many people, I'm far less interested in why this guy is filing suit so late in the game (which will almost certainly become a critical point of contention in Facebook's arguments), than I am interested in the legitimacy of the contract itself. If it turns out that Zuckerberg signed this contract in good faith, then I'm going to start to see him as either a real sleazebag, or a complete idiot. Anyone can read and understand the terms of that contract, so either he didn't read it (idiot), or he purposefully ignored it when Facebook hit it big (sleazebag). Either way, not good for Zuckerberg.
Facebook's army of attorneys may ultimately win the day on technical grounds, but if this contract is legitimate, I'd hate to see the plaintiff lose out on a lucky investment because he was an unsophisticated investor.
"... real sleazebag or a complete idiot" is a bit harsh. He was young and naive. Who isn't at 18? Zuckerberg was born May 14, 1984. This contract was signed April 28, 2003. He was 18 years old. If this contract had been signed a year earlier, it wouldn't matter because Zuckerberg would have been too young to be a party to it. Even though he was old enough to contract, I doubt Zuckerberg understood the implications of that contract (assuming it's real.) Ceglia probably didn't either.
> If this contract had been signed a year earlier, it wouldn't matter because Zuckerberg would have been too young to be a party to it.
Incorrect. A 17 year old can sign a contract, they just have the option of voiding the contract until they turn 18. (Which is why most people avoid signing contracts with minors.) Once they turn 18 they no longer have the option of voiding the contract.
There may be a period you can dispute the contract while 18 but not indefinitely. I don't remember all the details but I do know that contracts signed with minors are valid just very risky for you.
I'll grant that the "idiot" part is less damning, for exactly the reasons you mention -- maybe it's possible that he was young and naïve, and maybe it was possible that he could overlook the potentially dramatic consequences of signing that contract. But honestly? If you're precocious enough to be taking investments from strangers to build a business, you're precocious enough to read and understand a simple contract. I'm not inclined to give much sympathy on the basis of ignorance.
As for the sleazebag count, I'm not sympathetic at all. If it turns out that Zuckerberg did sign the contract in good faith, and that he did subsequently ignore it when Facebook blew up, that's pretty crooked. Maybe you can argue that he simply forgot about the contract, but that goes back to idiocy -- wouldn't you remember the guy who gave you $1,000 to buy a 50% stake in your company?
No, something is fishy here, and if the contract is real and not signed under duress it doesn't speak well to his judgment. Considering the history of claims against him, I'm not willing to assume that Zuckerberg is a boy business genius while simultaneously forgiving huge legal gaffes like this one.
Sleazebag is one of one nicer things I've heard about Zuck, but he's definitely not an idiot. Remember that this isn't the first serious lawsuit about the origin of Facebook. He seems like a real "ends justify the means" type.
> Is contract law so inviolate that most people here would advocate honoring it?
Assuming that the contract was made in good faith, he had the opportunity to counsel a lawyer, the other guy didn't lie to him, etc, etc. Then yes I would normally believe the contract should be honored - it is bad horrible contract from Zuckerbergs perspective, but it is still a contract that he signed.
However this was a long time ago, and since the guy didn't show up until now it don't think it is fair to actually give him the procentage of facebook - a lot has been sold to the investors and he could should have shown up years ago.
From my reading it looks like Ceglia was supposed to pay the hosting fees. I wonder how much the hosting fees are and what his bill would look like going back 6 years to now.
Actually, it says that the "Seller [Zuckerberg] agrees to maintain and act as the sites webmaster and to pay for all domain and hosting expenses from the funds received."
I think it is pretty certain that if Ceglia wins this the results for the tech start up industry will be pretty bad. Facebook shares have been trading in closed deals for a while and I am sure there are many people that believe that they have millions or even billions of dollars in their facebook shares. If this guy wins all of these shares may lose more than 80% of their value. (This is not necessarily the case, but there is a marked possibility).
This will be felt in the VC industry, believe you me. The VC and angel investor industry relies on the big payoff and if the biggest payoff in recent history turns out to be a dud, then there will be much less demand for new investments and the few investors that remain will insist even more on professional CEOs to swoop in and take things over.
So this is something to think about. Of course, it does not mean he should not get the shares if he has a right to them legally, but the repercussions of this can be huge.
I'm not sure where the (80%) comes from, but investors will only lose value if the total value of Facebook declines.
If it turns out that Ceglia and Zuckerberg each owned 50% of Facebook in 2003, their ownership would each be diluted down in subsequent rounds of financing (from the "Investors").
So if the equity capitalization before this lawsuit is assumed to be "Investors" - 40% and Zuckerberg - 60% (an example), the new capitalization if Ceglia wins would be Investors 40%, Zuckerberg 30% and Ceglia 30%.
The contract talks about a "Fax Street Database" and something called "Face Book".
If you look at any Face Book page it clearly identifies the service as "facebook". I know this is kind of nitpicky but the string "Face Book" is different than the string "facebook".
Also, statute of limitation is 7 years. I think this contract just turned into a pumpkin.
Why would someone sit on something like this for 7 years? I can't think of any reasonable explanation. Facebook's lawyers also seem completely unprepared. How could Mark not have seen this coming? There's got to be an interesting story here.
Why would someone sit on something like this for 7 years?
This is obvious.
Why would you sue over a company that might not even turn a profit or could go bankrupt the next day while the founders are poached by Google, leaving you with an empty shell of a company?
The answer: you only sue when a company starts making money. And for Facebook, that has happened only very recently.
Yeah, for the plaintiff though, he may run into some very real statute of limitation issues. Had he waited just 6 months less, he'd be in a much better position.
A few years ago, I signed a contract with an awful web startup. At the time, I was laughing on the inside because I thought it was funny how much they (two brothers) wanted to pretend they were a legitimate company. One brother was the "CEO," and the other brother was "Vice President." So like a CEO, a VP, and then no employees..
Looking at the Ceglia/Zuckerberg contract, I got chills, and began digging into my old documents, looking for that contract. The last thing I want is to find out I signed 50% of earnings away.
I discovered that I did sign 50% of my earnings away! Fortunately, the agreement was between their company and my now deceased startup. I'm glad my startup failed..
I just can't conceive of Ceglia's claim holding. It seems that, regardless of the authenticity, systems are in place to prevent Facebook from undergoing such a drastic shift. Can anyone relate this to similar circumstance?
I'm no lawyer, but the contract says "The agreed upon completion for the expanded project with working title "The Face Book" shall be Janruary 1, 2004..."
I would imagine typos could affect a contract - would that be the case here?
Shouldn't he have to prove he paid $1,000 to Zuckerberg? We may not be getting all of the facts in the case, so it's questionable whether this is valid on the terms themselves.
Also, oddly one instance says "The Page Book" while another two say "The Face Book."
Not to sound dense, but shouldn't there be two checks if this is how he hopes to prove he paid? One for the StreetFax and one for The Face Book project? Or does it say something about The Face Book in the memo (cannot read)?
It could turn out that he paid $1,000 for the StreetFax project but they both abandoned the original "The Face Book."
Yes, I'd agree there's a chance that this contract (if real) was canceled by mutual agreement (or de facto non-performance by both sides) before the real Facebook work began. That's why it'd be interesting if Zuckerberg's email archives of the era include any exchanges with Ceglia. Just a couple of words between them indicating any different understanding could make all the difference.
Other lawsuits have already plumbed Zuckerberg's email and other personal documents from this era... including a personal journal. Did Ceglia and his 'StreetFax' project appear in any of that? Is there any independent evidence Ceglia and Zuckerberg met?
Okay, on the one hand, this guy will surely be seeing some money, unless it's a forged signature, in which case, he will surely be going to jail.
On the other hand, it is extremely unlikely he will get anything near the order of magnitude of what he's asking for, unless the judge well and truly hates, and I mean hates Zuckerberg and facebook. And the appeals judge, and so on, up the chain.
One reason for this is that the judge is going to be weighing on the one hand this guy's thousand dollar investment, and on the other hand, everybody else's millions of dollars of investment, and asking if harming the millions of dollars of investment is proper on behalf of the guy who put in $1k.
If Zuckerberg is determined to have signed this all away, then the incorporation and all the shareholder agreements, and statements, etc. are void and fraudulent. This impacts not just Zuckerberg, but the other parties he is in business with.
It is nearly inconceivable that a judge would trash the entire corporate structure of Facebook based on this suit. Now, that said, he may sit Z down and say "I'm dumping this problem on your lap, fix it, buddy" by leaving the door open for personal fraud claims and damages to the corporation.
Regardless, in the end a judge is going to be asked if a $1,000 passive investment really should be worth billions of dollars in 6 years. The answer to that question in our country is 'no.'
Also, no way in a cold and frozen hell will DST and MS allow this guy to sit on the board and vote shares. The legal forces arrayed against him are going to be seriously, seriously formidable.
Look for a multimillion dollar settlement. Less than $100mm.
> One reason for this is that the judge is going to be weighing on the one hand this guy's thousand dollar investment, and on the other hand, everybody else's millions of dollars of investment, and asking if harming the millions of dollars of investment is proper on behalf of the guy who put in $1k.
Yeah, rules only apply to the little guys. Contracts should only benefit the big, rich organizations.
"Regardless, in the end a judge is going to be asked if a $1,000 passive investment really should be worth billions of dollars in 6 years. The answer to that question in our country is 'no.'"
I would hope that in this country, if the investment is backed by the proper legal documents, that the answer would be yes. that whole rule of law thing.
Otherwise, are you saying that if one makes an angel investment of $1K for 10% of a company, that a judge should back other larger deeper-pocketed investors against the angel primarily because the judge would ask "if harming the millions of dollars of investment is proper on behalf of the guy who put in $1k."?
Depending on the incorporation structure that Facebook has, and the stated shareholder disclosures and shareholder agreements signed, this could cause serious difficulty for other investors, and possibly employees of Facebook. Those are real damages, and judges can and will consider them along with the $1k.
In general, American judges have tended to care about this sort of thing -- they are very corporation friendly, especially to reasonably good corporate citizens.
This judgment if done quickly and at the rate asked for is largfer than most tobacco company rulings; and they have knowingly been addicting and killing hundreds of thousands of children around the country! (And have in some cases taken many, many years to wind through the courts.)
In short, if you put in $1k into a startup, and then those guys abandon it, go start a new company with your technology and raise a million dollars, you damn well better be in touch with those founders and investors early if you want to protect your investment.
Think about that for a second: you're a passive investor, hence don't add value to the company outside your money. You put in enough money for one month's rent in Harvard Square. Now, you get outside investors who have put in, say a million dollars. No matter what your agreement with the founders, who invented all this stuff, what do you think the million dollar funding group will offer you when you start rattling their cage around the time of closing the round?
The point is, if he has a real claim, and if he had pursued it as he should have, he still would, right now, own much less than Zuck does if he'd had any sort of quality angel or Series A investors. A guy that takes 50% for $1,000 is NOT an angel. He's either total smallfry or a predator or both; he wouldn't be welcome around the table with legit investors, and he almost certainly would have been bought out for either a small amount of nonvoting stock, or cash, like say $50k.
This would be different if he and Zuck had sat side by side for a year, working on features and split equity based on that, very different, but that's not the situation, no matter how much of a tool Zuckerberg was at that point in his life.
> "It is acknowledged that this is a work made for hire agreement and that all Intellectual property rights or patent rights are that of Streetfax Inc. [...] In the event that StreetFax defaults on its payment terms rights would be granted to seller."
Did StreetFax pay to get "The Face Book" running? Because if they did, why wouldn't they own it and have it running? If they didn't pay, they've got no case whatsoever.
Who here thinks that Zuck has always known about this contract? And has been praying every day that Ceglia had forgotten about it / died / etc. And the stress and stakes rose day after day, Zuck dying on the inside like w/ the tell-tale heart, stress coming through the cracks at his AllThingsD meltdown, etc...?
Well, he'd have been over 18 at that point (18 years, 11 months, since the contract signature date is 23 Apr 2003), but you're right, he was under the age of majority in the State of New York.
The majority sentiment in this discussion seems to be favoring Zuckerberg. I am not sure why hackers, with the usually higher integrity and honor than most, will defend this scumbag who seems to defraud not one, two, but three different parties, and laughs with his buddy on IM about his ability to steal people's information.
Is it because Zuckerberg is now rich/powerful? Are we being more lenient to those folks now? Because these are the folks, the ones without integrity but with money/power in our society, that are ruining US. These are the folks that are crashing people's 401k, devaluing the dollar, giving bailout money to their buddies, shipping jobs overseas, cheating, lying, and stealing their way to the top. These are the folks that are bankrupting our world. Pretty soon, one day you wake up, you'll have the social security/medicare benefit disappear. your house will be worthless, and so will your 401k. After you've worked hard for 30 years. Maybe then you'll hate the Mark Zuckerbergs of the world.
It's probably because they think his [as personally told] story could/will happen to them. A hacker in a dorm room turns out to ignite the planet and become a [paper] billionaire nearly overnight. It's a great story and would be inspiring if true, but like many great stories it's full of shit. He apparently screwed over nearly everyone he came in contact with to get on top.
Whatever bad Zuckerberg has done, it doesn't seem especially plausible that Ceglia made a contribution significant enough to merit a percentage of Facebook.
At the same time, if the contract is authentic, it seems like there's a big back-story here you'd have to learn before making any judgments here.
And, hey, I'll admit I'm really curious what that story is.
As far as justice goes, I don't have any sympathy for someone who continually stole other people's efforts and took all the money/glory/power. I doubt he'll lose it all, but I wouldn't consider that unfair.
Regardless of what happens, it should prove interesting.
Assuming it's as valid contract, can the fact that it was apparently unknown until now count against it? It seems fairly obvious that subsequent investors would have bought out this guy at a much earlier stage if they'd known that there was someone with such a significant share.
Obligatory IANAL, but I don't see why this is such a big deal:
the corporation that currently owns Facebook almost certainly didn't exist when this was signed (let's assume it was!). So Ceglia's claim is against Zuckerberg, not Facebook. At most he would have claim to a certain amount of IP that became what Facebook currently is. So he may have partial ownership of a small amount of Facebook.
If so, this whole thing just degenerates into two sets of lawyers figuring out how much it takes to make him shut up and go away.
96 comments
[ 3.3 ms ] story [ 72.9 ms ] threadBut, I thought there was a list of things that are normally works for hire (without that being explicitly specified), and a list of things that are allowed to be specified as works for hire, and that software isn't on either list?
With Facebook now taking the "we don't know if he signed it, but if he did it's invalid anyway!" argument it looks like Zuckerberg may indeed have put pen to this paper.
My guess would be either he assumed it was contracting boilerplate and didn't read it properly (based on the memories of my behavior in my early 20's, fairly likely), or just skipped over the single paragraph with criminally bad English that referred to the purchase and design of "The Face Book".
This will be interesting.
I think the best argument you can make for the possibility that Zuck did not sign this contract is that he did not sign it, but does not want to be brought to the witness stand for some reason, so he has told his lawyer not to make the validity of his signature an issue of contention but to try to attack the contract on other grounds.
I'm having trouble seeing what your point of disagreement is.
From what we both said, if the lawyer believes or knows that the client did not sign, the lawyer should make that argument. But the lawyer will also make arguments in the alternative, arguing that even if the client did sign, they should still win the case.
That looks like agreement, not disagreement.
In any case, Rumpelstiltskin's contract probably wouldn't be honored in a court of law.
http://www.law.cornell.edu/rules/frcp/Rule11.htm
The signed contract seems to be the main evidence Ceglia is counting on - earlier in the case he said allusion to surprising people when the evidence comes.
So it seems plausible the signature is valid though this naturally doesn't mean Ceglia's suit will succeed.
Second is the conditioned development of the software, program and for the purchase and design of a suitable website for the project Seller has already initiated that is designed to offer the students of Harvard University access to a website similar to a live functioning yearbook with the working title of "The Face Book".
It is agreed that the purchaser will own a half interest (50%) in the software programming language and business interest derived from the expansion of the service to a larger audience.
And goes on to say he gets 1% more of the business every day its not completed after Jan 1 '04.
Thats a pretty valuable piece of paper this guy has held onto for the last six years, their lawyers will make a lot of money on this if its not a forgery.
http://www.scribd.com/doc/34239119/Ceglia-v-Zuckerberg-compl...
I personally doubt stockholders will lose a single share no matter what happens.
Considering that his lawyers are "unsure" he signed the contract, this is basically an admission that the contract looks valid at first glance, and that the lawyers are probably spending day and night trying to get it dismissed on a technicality, or hoping it is a forgery.
It will also be interesting to know if people here think Ceglia deserves those Facebook shares. Many people here are investors and would probably side with him, but others have expressed the sentiment that he provided a negligible amount of money and therefore contributed very little to the success of Facebook.
Interesting, I always thought most HN were starving poor hackers :)
That's what interests me most about this. I'm assuming this will come to some settlement that won't destroy facebook, and will probably give this guy some money. I'm curious about the ethics involved. Is contract law so inviolate that most people here would advocate honoring it?
Facebook's army of attorneys may ultimately win the day on technical grounds, but if this contract is legitimate, I'd hate to see the plaintiff lose out on a lucky investment because he was an unsophisticated investor.
Incorrect. A 17 year old can sign a contract, they just have the option of voiding the contract until they turn 18. (Which is why most people avoid signing contracts with minors.) Once they turn 18 they no longer have the option of voiding the contract.
There may be a period you can dispute the contract while 18 but not indefinitely. I don't remember all the details but I do know that contracts signed with minors are valid just very risky for you.
As for the sleazebag count, I'm not sympathetic at all. If it turns out that Zuckerberg did sign the contract in good faith, and that he did subsequently ignore it when Facebook blew up, that's pretty crooked. Maybe you can argue that he simply forgot about the contract, but that goes back to idiocy -- wouldn't you remember the guy who gave you $1,000 to buy a 50% stake in your company?
No, something is fishy here, and if the contract is real and not signed under duress it doesn't speak well to his judgment. Considering the history of claims against him, I'm not willing to assume that Zuckerberg is a boy business genius while simultaneously forgiving huge legal gaffes like this one.
Assuming that the contract was made in good faith, he had the opportunity to counsel a lawyer, the other guy didn't lie to him, etc, etc. Then yes I would normally believe the contract should be honored - it is bad horrible contract from Zuckerbergs perspective, but it is still a contract that he signed.
However this was a long time ago, and since the guy didn't show up until now it don't think it is fair to actually give him the procentage of facebook - a lot has been sold to the investors and he could should have shown up years ago.
How about 50% of just Zuckerberg's share? Surely that would be fair.
This will be felt in the VC industry, believe you me. The VC and angel investor industry relies on the big payoff and if the biggest payoff in recent history turns out to be a dud, then there will be much less demand for new investments and the few investors that remain will insist even more on professional CEOs to swoop in and take things over.
So this is something to think about. Of course, it does not mean he should not get the shares if he has a right to them legally, but the repercussions of this can be huge.
If it turns out that Ceglia and Zuckerberg each owned 50% of Facebook in 2003, their ownership would each be diluted down in subsequent rounds of financing (from the "Investors").
So if the equity capitalization before this lawsuit is assumed to be "Investors" - 40% and Zuckerberg - 60% (an example), the new capitalization if Ceglia wins would be Investors 40%, Zuckerberg 30% and Ceglia 30%.
No impact on "Investors" ownership.
This case is irrelevant - it will either be dismissed or settled and will have ZERO impact on valuation or otherwise on existing investors.
Here's the link I got:
http://docs.docstoc.com/pdf/7291/39b8d9a6-aa9b-4faf-92c6-baf...
If you look at any Face Book page it clearly identifies the service as "facebook". I know this is kind of nitpicky but the string "Face Book" is different than the string "facebook".
Also, statute of limitation is 7 years. I think this contract just turned into a pumpkin.
This is obvious.
Why would you sue over a company that might not even turn a profit or could go bankrupt the next day while the founders are poached by Google, leaving you with an empty shell of a company?
The answer: you only sue when a company starts making money. And for Facebook, that has happened only very recently.
Looking at the Ceglia/Zuckerberg contract, I got chills, and began digging into my old documents, looking for that contract. The last thing I want is to find out I signed 50% of earnings away.
I discovered that I did sign 50% of my earnings away! Fortunately, the agreement was between their company and my now deceased startup. I'm glad my startup failed..
50% of something is more than 100% of zero, you know.
Not surprising it failed if you ask me, given the attitude.
Not to say 50% is not brutal or anything for a contract.
I would imagine typos could affect a contract - would that be the case here?
Also, oddly one instance says "The Page Book" while another two say "The Face Book."
http://www.scribd.com/doc/34239119/Ceglia-v-Zuckerberg-compl...
But, the alleged contract is harder to read in that copy.
updated to point to page, thanks qhoxie!
Page 14: http://www.scribd.com/doc/34239119/Ceglia-v-Zuckerberg-compl...
It could turn out that he paid $1,000 for the StreetFax project but they both abandoned the original "The Face Book."
On the other hand, it is extremely unlikely he will get anything near the order of magnitude of what he's asking for, unless the judge well and truly hates, and I mean hates Zuckerberg and facebook. And the appeals judge, and so on, up the chain.
One reason for this is that the judge is going to be weighing on the one hand this guy's thousand dollar investment, and on the other hand, everybody else's millions of dollars of investment, and asking if harming the millions of dollars of investment is proper on behalf of the guy who put in $1k.
If Zuckerberg is determined to have signed this all away, then the incorporation and all the shareholder agreements, and statements, etc. are void and fraudulent. This impacts not just Zuckerberg, but the other parties he is in business with.
It is nearly inconceivable that a judge would trash the entire corporate structure of Facebook based on this suit. Now, that said, he may sit Z down and say "I'm dumping this problem on your lap, fix it, buddy" by leaving the door open for personal fraud claims and damages to the corporation.
Regardless, in the end a judge is going to be asked if a $1,000 passive investment really should be worth billions of dollars in 6 years. The answer to that question in our country is 'no.'
Also, no way in a cold and frozen hell will DST and MS allow this guy to sit on the board and vote shares. The legal forces arrayed against him are going to be seriously, seriously formidable.
Look for a multimillion dollar settlement. Less than $100mm.
Yeah, rules only apply to the little guys. Contracts should only benefit the big, rich organizations.
I would hope that in this country, if the investment is backed by the proper legal documents, that the answer would be yes. that whole rule of law thing.
Otherwise, are you saying that if one makes an angel investment of $1K for 10% of a company, that a judge should back other larger deeper-pocketed investors against the angel primarily because the judge would ask "if harming the millions of dollars of investment is proper on behalf of the guy who put in $1k."?
In general, American judges have tended to care about this sort of thing -- they are very corporation friendly, especially to reasonably good corporate citizens.
This judgment if done quickly and at the rate asked for is largfer than most tobacco company rulings; and they have knowingly been addicting and killing hundreds of thousands of children around the country! (And have in some cases taken many, many years to wind through the courts.)
In short, if you put in $1k into a startup, and then those guys abandon it, go start a new company with your technology and raise a million dollars, you damn well better be in touch with those founders and investors early if you want to protect your investment.
Think about that for a second: you're a passive investor, hence don't add value to the company outside your money. You put in enough money for one month's rent in Harvard Square. Now, you get outside investors who have put in, say a million dollars. No matter what your agreement with the founders, who invented all this stuff, what do you think the million dollar funding group will offer you when you start rattling their cage around the time of closing the round?
The point is, if he has a real claim, and if he had pursued it as he should have, he still would, right now, own much less than Zuck does if he'd had any sort of quality angel or Series A investors. A guy that takes 50% for $1,000 is NOT an angel. He's either total smallfry or a predator or both; he wouldn't be welcome around the table with legit investors, and he almost certainly would have been bought out for either a small amount of nonvoting stock, or cash, like say $50k.
This would be different if he and Zuck had sat side by side for a year, working on features and split equity based on that, very different, but that's not the situation, no matter how much of a tool Zuckerberg was at that point in his life.
> "It is acknowledged that this is a work made for hire agreement and that all Intellectual property rights or patent rights are that of Streetfax Inc. [...] In the event that StreetFax defaults on its payment terms rights would be granted to seller."
Did StreetFax pay to get "The Face Book" running? Because if they did, why wouldn't they own it and have it running? If they didn't pay, they've got no case whatsoever.
So unless my coffee did not kick in yet; that would make him under or around the age of 18 which is below the age of majority in NY state:
http://en.wikipedia.org/wiki/Age_of_majority
Is it because Zuckerberg is now rich/powerful? Are we being more lenient to those folks now? Because these are the folks, the ones without integrity but with money/power in our society, that are ruining US. These are the folks that are crashing people's 401k, devaluing the dollar, giving bailout money to their buddies, shipping jobs overseas, cheating, lying, and stealing their way to the top. These are the folks that are bankrupting our world. Pretty soon, one day you wake up, you'll have the social security/medicare benefit disappear. your house will be worthless, and so will your 401k. After you've worked hard for 30 years. Maybe then you'll hate the Mark Zuckerbergs of the world.
Whatever bad Zuckerberg has done, it doesn't seem especially plausible that Ceglia made a contribution significant enough to merit a percentage of Facebook.
At the same time, if the contract is authentic, it seems like there's a big back-story here you'd have to learn before making any judgments here.
And, hey, I'll admit I'm really curious what that story is.
Regardless of what happens, it should prove interesting.
If so, this whole thing just degenerates into two sets of lawyers figuring out how much it takes to make him shut up and go away.