Leaked Emails Heat Up Facebook Lawsuit

Just as Facebook fended off one legal challenge, another has erupted after a software developer claimed he owns 50 percent of the popular social networking website.

Facebook and its co founder, CEO Mark Zuckerberg have just won an important victory earlier this week when a federal court of appeals panel of three judges ruled that twin brothers Tyler and Cameron Winklevoss could not renege on a $65 million (£40m) settlement they made with Zuckerberg in 2008 and litigate for more money.

But shortly after that, the news emerged that Facebook was facing more legal woes after a New York software developer, a man by the name of Paul Ceglia, claimed in a new lawsuit to have rights to 50 percent of Zuckerberg’s equity in Facebook.

Email Evidence

Facebook has reportedly called Ceglia “a scam artist”. But Ceglia has updated his lawsuit to include email evidence, which he claims is proof of his claim.

The purported emails between Ceglia and Zuckerberg are from the early years of the social networking site, and does show a relationship, albeit professional one, between the two men.

And now these emails have been leaked online.

Ceglia is essentially claiming that Facebook was partly his idea and that Zuckberberg signed a contract with him to give him 50 percent ownership after Ceglia made a total investment of $2,000 (£1,228) in the early Facebook project.

Prior to that Ceglia made a payment of $1,000 (£614) to Mark Zuckberberg, for doing coding work on Ceglia’s Streetfax.com project.

According to Business Insider, which has seen one email dated 30 July, 2003, Zuckerberg is alleged to have written the following.

“I’d like to use [the StreetFax search engine] for the Harvard site [Facebook], I think it will really help people find each other, even if they spell names incorrectly. Would it be agreeable with you if I adapt the source code?”

Alleged Contract

According to a Business Insider analysis of the alleged contract between the two men, it calls for Ceglia to purchase a 50 percent interest in a project that Zuckerberg was already working on – an online yearbook for Harvard students known as “The Face Book”.

There are also penalties for late completion that increase this ownership percentage over time.

“The contract between the Purchaser and Seller as Purchase agreement and ‘work made for hire’ reflects two separate business ventures, the first being for the work to be performed for the StreetFax Database and the Programming language to be provided by Seller,” the email apparently says.

“Second, it is for the continued 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 wesite [sic] similar to a live-functioning yearbook with the working title of “The Face Book,” the email added.

And crucial, the contract then apparently says the following.

“It is agreed that Purchaser will own a half interest (50 percent) in the Software, programming language and business Interests derived from the expansion of the service to a larger audience.”

Facebook Fightback

Meanwhile it seems that Facebook’s lawyers are not going to take any prisoners.

“From the outset, we’ve said that this scam artist’s claims are ridiculous and this newest complaint is no better,” said an email seen by the Olean Times Herald, from Orin Snyder, a lawyer with the firm of Gibson, Dunn & Crutcher.

The email was apparently sent to the publication from Andrew Noyes, Facebook’s manager of public policy communication.

Whatever the truth of the matter, there are still question marks surrounding the case, as well as the authenticity of the alleged contract.

The first question relates to why Ceglia decided to wait almost seven years to file this lawsuit.

And the second concerns the character of Ceglia himself, who according to Business Insider, was previously convicted of criminal fraud, in connection with a wood-pellet company he operated.