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Is It A Case of ‘What Goes Around, Comes Around” for Zuckerberg?




There is a lot of buzz around new developments that go back to the early days of Facebook. No it’s not another movie but if the legal case being brought by a man who claims he should have 50% of Mark Zuckerberg’s equity is real, there may be a need to make another one.

Normally, this kind of case would be viewed as a get rich quick play by most because there are more than a few large question marks in the claims of a web developer in upstate, New York. He has already taken one swipe at claiming that an amended contract from 2004 between he and Facebook founder Mark Zuckerberg entitles him to some serious cash.

The Wall Street Journal reports

The strange fight over the origins of Facebook Inc. has new lawyers, new allegations—and possibly new legs.

Paul Ceglia, who last year surprised Silicon Valley by claiming he was entitled to a large stake in the social-networking company, filed an amended complaint citing emails he says support his claims against Mark Zuckerberg, Facebook’s founder and chief executive.

Mr. Ceglia, who lives in Wellsville, N.Y., has hired DLA Piper, one of the world’s largest law firms, to represent him in the case he filed in U.S. District Court for the Western District of New York. He also has added Dennis Vacco, a former New York attorney general, as co-counsel.

The suit claims a 2003 contract between Mr. Ceglia and Mr. Zuckerberg entitles Mr. Ceglia to 50% of the founder’s equity from when he started the company in 2004.

Why are we giving this any attention? It’s mainly because the law firm that has been retained by Mr. Ceglia is big. Real big. Most big firms don’t do a lot of ambulance chasing and high risk cases because they have the resources to weed out who has a case and who doesn’t before they decide to take on a client. Like any big firm they want to feel like there is a real chance of ‘winning’ (which may be just a large out of court settlement rather than a trial and verdict but it’s the money that matters, not the truth, right?) before they invest time and resources in pursuing a case.

What makes this interesting is the intrigue around just how Facebook started and it dredges up all of the questionable characteristics of none other than the social media wonderkind himself, Mark Zuckerberg. Of course, let’s not ignore that Mr. Ceglia has had his own legal issues and there are likely to be countless questions about his character. My guess is that the lawyers think they know about him enough to make something fly.

Zuckerberg has been viewed from both ends of the spectrum. Depending on who you speak to he can be a man of very questionable character or he can be Time’s Man of the Year. He can be portrayed as the starter of revolutions or the man who stole the idea of Facebook. He can be the sweating, uncomfortable kid on stage trying to talk about his service or the new, improved and slicker Zuck.

So what’s going to happen with this lawsuit? It’ll be fodder for many continue to dig into Zuckerberg’s past and that never seems to come up with nice things about him and his character. I have never personally met the man and it is very likely I never will, so any assumptions I make (along with just about anyone else) about him will come from the court of public opinion. That’s a court that no one wants to be tried in because, let’s face it, no one is even close to perfect yet most people like to judge.

The lawsuit and the outcome will almost be secondary unless of course, Mr. Ceglia’s attorneys somehow convince someone that he really is entitled to half of Facebook based on a claim he sat on for over 6 years because he says he had forgotten about it. That alone is sketchy. But hey, stranger things have happened and if Zuckerberg suddenly became 50% poorer that would be something of interest.

In the end though, the big loser in all of this is likely to be Zuckerberg because the more that is revealed about who he is and how he handles business dealings the more suspect he becomes. I have always believed that culture in a company comes from the top down so the darker the image that is painted of Zuckerberg it’s natural to believe that Facebook is operating like he does in general. Look at how Facebook has approached privacy. It’s always been a “let’s ask for forgiveness rather than permission” approach which is the same as saying “let’s see what we can get away with”.

Maybe Zuckerberg’s tendency to try to get away with things will come back to bite him. Who knows? Honestly, whether the case is won, lost or dismissed is irrelevant because what’s really on trial is Mark Zuckerberg’s character or lack thereof. That’s what will likely be with him forever in the digital world he helped to create that can never forget and often chooses not to forgive.

  • http://www.seo-theory.com/ Michael Martinez

    Facbook has become the new AOL. It’s flooding the Internet with unsophisticated users who are dragging the rest of us down into trapped-marketing-hell.

    I’m only on Facebook because so many of my friends sent me invites I HAD to create the account to let them connect with me.

    I rarely log in ….

    • http://www.frankthinking.com Frank Reed

      @Michael – So is there value there? What would happen if Zuckerberg is dragged through the muck in a situation like this?

      And, in the end, does it matter whether we like it personally when there are a reported 600 million accounts to potentially be marketed to?

      I agree that Facebook is a lot of junk but we ignore it at what cost? What would a high quality social network look like?

      Geesh, Michael, you sure made me think of a lot of questions :-) and there are so many more!

    • axlblackmar

      This story is very logical as many others where someone get a big power and very quickly ! I don”t think Ceglia could win any dollars because of his past. I think that things will go decrescendo as soon as Facebook will lose his power. Fbook has reached the top of its metheoric growth and will suffer of the fashion trend. the main problem is that people starting to leave Fbook and turn to other websites like Outlyf or else, and probably, facebook will be damaged sooner than we guess because of its overvalue…

  • http://thestoppedclock.blogspot.com/ Aaron

    Non-Cynical Me: “Of course you’re right – a big firm will look at the merits of the case, will have reviewed the documents claimed to support the case and will have a strong sense that the case has merit. Otherwise they would have passed on the case.”

    Cynical Me: “If the claim is colorable and worth billions, it was nearly inevitable that a firm would take the case, and given the amount of money the defense has available it was nearly inevitable that it would be a large firm with the staff and resources necessary to press forward against a formidable defendant. If rumors that Facebook is going public within the next year or so turn out to be true, the firm understands that even a marginal case can result in a large settlement as investors won’t want to buy stock in a company that may suddenly be losing 80% of its value when the lawsuit is over – and a big firm can potentially keep this case going for years. Think of the hundreds of millions Google paid to settle various claims before its IPO.”

    • http://www.localbasix.com Frank Reed

      Good point. Hadn’t thought that one through (the cynical you). Very possible.