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April 11, 2011, was a memorable legal day for Facebook and its co-founder and CEO, Mark Zuckerberg. One lengthy bit of litigation is petering out, while one is just starting up.
The first lawsuit-so long-term in nature (eight years) that a feature film about it has come and gone-ground to a halt when a federal court of appeals panel of three judges ruled that twin brothers Tyler and Cameron Winklevoss cannot renege on a $65 million settlement they made with Zuckerberg in 2008 and litigate for more money.
In the newer case, New York software developer Paul Ceglia, who claims to have rights to 50 percent of Zuckerberg’s equity in Facebook, said April 11 he has emailed proof from Zuckerberg of his claim and will litigate in federal court. Facebook has called Ceglia “a scam artist.”
The Winklevosses have been contending legally for years that Zuckerberg stole the idea for Facebook from them. The Academy Award-winning film “The Social Network” dramatized the story of the case.
The Winklevosses, Harvard University classmates of Zuckerberg, had asked the court in January to revisit a $65 million legal settlement they signed with Zuckerberg in 2008. The brothers contend that Zuckerberg stole their idea after he was hired by them to program their social networking site, called ConnectU, in 2003.
In the settlement, the Winklevosses received $20 million in cash and $45 million worth of stock valued at $36 per share in the deal.
At the time of the 2008 settlement, Facebook made no admittance that Zuckerberg had stolen the twins’ idea in agreeing to end the litigation. In fact, Zuckerberg has consistently maintained that Facebook was his creation.
The three-judge panel said in its ruling April 11 that it saw no reason to reopen their case against Facebook, the privately held-and world’s largest-social networking company that has been valued at about $55 billion.
“The Winklevosses are not the first parties bested by a competitor who then seek to gain through litigation what they were unable to achieve in the marketplace,” the three Ninth Circuit Court of Appeals judges wrote. “At some point, litigation must come to an end. That point has now been reached.”
Apparently the Winklevosses and their lawyers didn’t understand the ruling. Jerome Falk, a lawyer representing the Winklevosses, released a statement after the hearing saying that his legal team will file for a rehearing within two weeks.
“In my judgment, the opinion raises extremely significant questions of federal law that merit review by the entire Ninth Circuit Court of Appeals,” Falk said in a statement.