Provider of Facebook said it holds 50%, emails as evidence

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April 12, 2011, 6:26 PM EDT By Bob Van Voris

(Updates with change of law firms in ninth paragraph.)

April 12 (Bloomberg) -- E-mails allegedly written by Facebook Inc. co-founder Mark Zuckerberg are cited in a new court filing by Paul Ceglia as proof of his claim that a 2003 contract gave him 50 percent of the company.

The revised complaint, filed yesterday in federal court in Buffalo, New York, includes new allegations supporting Ceglia’s claim to own part of Palo Alto, California-based Facebook, the world’s biggest social-networking site. Ceglia says Zuckerberg sent him numerous e-mails discussing the terms of the contract and the early development of “The Face Book.”

“They’re exactly what you would expect between two people trying to develop a website,” said Robert Brownlie, a lawyer for Ceglia, referring to the e-mails in a telephone interview.

Ceglia alleges that Zuckerberg defrauded him, lying about the early success of “The Face Book” at Harvard University, where Zuckerberg was a student at the time. Ceglia claims he is entitled to part ownership of Facebook, a closely held company worth as much as $55 billion, according to Sharespost.com, an online marketplace for investment in companies that aren’t publicly traded.

‘The Social Network’

On the same day that Ceglia amended his complaint, a federal appeals court upheld the settlement of a years-long legal dispute dramatized in the Academy Award-winning 2010 film “The Social Network” that pitted Zuckerberg against former classmates from Harvard who accused him of stealing the idea for Facebook.

“This is a fraudulent lawsuit brought by a convicted felon, and we look forward to defending it in court,” said Orin Snyder, a lawyer for Facebook, in an e-mailed statement. Snyder may have been referring to Ceglia’s 1997 guilty plea to possession of hallucinogenic mushrooms in Carthage, Texas. Ceglia was fined $15,000 and permitted to return to New York state, according to court files.

In an interview with Bloomberg in July, Ceglia said he regretted the incident. He didn’t return a voice-mail message yesterday. Brownlie didn’t return an e-mail today seeking comment on Snyder’s characterization of his client.

Snyder, a partner in the firm Gibson, Dunn & Crutcher LLP, called Ceglia’s original claim “ridiculous,” adding that “this newest complaint is no better.”

New Lawyers

Ceglia also filed papers yesterday switching lawyers from Terrence Connors, from the Buffalo firm Connors & Vilardo LLP, to a team of lawyers from DLA Piper LLP, one of the world’s biggest law firms. DLA Piper has 3,500 attorneys in 29 countries, according to its website. Former New York Attorney General Dennis Vacco is also part of the legal team.

In yesterday’s ruling by the U.S. Court of Appeals in San Francisco, a panel of judges rejected a request by former Harvard students Cameron and Tyler Winklevoss to undo a settlement they reached with Zuckerberg in 2008. The Winklevoss twins argued the 2008 agreement should be voided because Facebook didn’t disclose an accurate valuation of its shares before they agreed to settle for $65 million in stock and cash.

The Winklevosses will ask a larger panel of judges on the appeals court to review the case, said Jerome Falk, an attorney for the brothers.

‘Stalling’ Upperclassmen

Among the e-mails that Ceglia cited in his new complaint is one dated Nov. 22, 2003, in which Zuckerberg allegedly told him: “I have recently met with a couple of upperclassmen here at Harvard that are planning to launch a site very similar to ours. If we don’t make a move soon, I think we will lose the advantage we would have if we release before them. I’ve stalled them for the time being,” Zuckerberg said, before asking for another $1,000 from Ceglia, according to the papers.

The Winklevosses were Harvard seniors when Zuckerberg put Facebook online in 2004.

Ceglia claims in his complaint that he contributed “his time, ideas, knowhow, and other ‘sweat equity’” to the start of Facebook. He claims he and Zuckerberg formed a general partnership in 2003 and that Ceglia should have gotten half- ownership when Facebook was incorporated the following year. Ceglia seeks unspecified damages and a judicial accounting of what Zuckerberg gained from Ceglia’s alleged half-interest over the years since then.

Fifty Percent

“Ceglia is entitled to receive 50 percent of the total equity interest in Facebook Inc. received by, and promised to Zuckerberg, including, but not limited to, stock, stock options and restricted stock units,” Ceglia claimed in the complaint.

Ceglia originally sued in state court in New York’s Allegany County June 30, claiming a two-page “Work for Hire” contract signed by Zuckerberg in 2003, when he was an 18-year- old freshman at Harvard, entitled Ceglia to half of the company, plus 1 percent per day that the start of the site, called “The Face Book,” was delayed. At the time, Ceglia’s total demand was for 84 percent of Facebook. The case was later transferred to federal court in Buffalo.

In the new complaint, Ceglia said that, at Zuckerberg’s request, he agreed in 2004 not to enforce the provision in the alleged contract that would have entitled him to a majority of Facebook.

“Zuckerberg sent to Ceglia e-mails complaining that a provision in the agreement giving Ceglia an additional 1 percent interest in the business for each day after Jan. 1, 2004, that ‘The Face Book’ website wasn’t complete, was unfair because it would give Ceglia more than 80 percent ownership of the business, including thefacebook.com website,” Ceglia said in the new complaint.

Different Years

The allegations in the complaint conflict with claims by Zuckerberg, Facebook and others that Zuckerberg conceived of the website as a Harvard sophomore in 2004, not in 2003, as Ceglia claims.

According to the complaint, Ceglia hired Zuckerberg through an ad on Craigslist.com to write computer code for a project of Ceglia’s called StreetFax.com. After several telephone conversations, Ceglia agreed in April 2003 to pay Zuckerberg $1,000 for work on StreetFax plus a $1,000 investment in “The Face Book,” which Zuckerberg was developing.

Ceglia and Zuckerberg met in the lobby of the Radisson Hotel in Boston on April 28, 2003, where they signed the contract, Ceglia said.

‘Women and Beer’

According to one e-mail, Zuckerberg asked if he could adapt the source code from StreetFax for use on The Face Book. And in a Sept. 2, 2003, e-mail, Ceglia dissuaded Zuckerberg from charging alumni a monthly fee for using the site.

“Maybe we could make it free until it was popular and then start charging?” Ceglia suggested, according to one excerpt.

On Jan. 5, 2004, Ceglia questioned Zuckerberg about delays in launching The Face Book, according to the complaint.

“I’m starting to think you just blew that money, Mark,” Ceglia allegedly said in an e-mail. “You know perfectly well that you can’t just take a person’s investment and then spend it on women and beer or whatever you do up there in Harvard.”

Later, after Zuckerberg launched the site, he allegedly rejected Ceglia’s idea to sell college T-shirts and mugs on The Face Book, saying in a Feb. 6, 2004, e-mail: “I feel I must take creative control and I just cannot risk injuring my site’s reputation by cheapening it with your idea of selling college junk.”

Ceglia also claims that Zuckerberg hacked his StreetFax website “on multiple occasions,” changing the code and forcing it to shut down, when Ceglia refused to pay Zuckerberg more than they’d agreed for his work on the project.

On July 22, 2004, a week before Zuckerberg incorporated Facebook, Ceglia claims, Zuckerberg sent an e-mail wishing him happy birthday and offering to return $2,000.

“Another summer is here and I still don’t have any time to build our site, I understand that I promised I would, but other things have come up and I am out in California working during break,” Zuckerberg wrote, according to Ceglia.

The case is Ceglia v. Zuckerberg, 1:10-cv-00569, U.S. District Court, Western District of New York (Buffalo).

--Editors: Peter Blumberg, Michael Hytha

To contact the reporter on this story: Bob Van Voris in U.S. District Court in Manhattan at rvanvoris@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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Price Ad Facebook increased by 40% last quarter, said the Marketing firm

April 11, 2011, 8: 31 am EDT by Brian Womack

April 11 (Bloomberg) - ads on site cost 40% of Facebook Inc. more per click last quarter that in the three previous months, as let dominance for social networking from the company he commanded higher prices, according to efficient Frontier.

The increase has been on the self-service of Facebook ads, not at higher price premium ads that run on home user pages, said principal Siddharth Shah, Director of business analytics in Sunnyvale, California, effective border based. "As advertisers are understanding this environment, they allocate budgets, and it becomes more and more competitive, said Shah, whose firm helps companies buy online ads. "They are willing to pay much more for the consumer."Facebook, with more than 500 million users, is equated with popularity growing in advertising revenues. Advertising on the site will be more than double to $ 4.05 billion this year, according to research firm that emarketer Inc. in New York.The company may have reached 2 billion dollars in sales last yearthree people who are familiar with the case, said in December. Facebook announced in January that it raised $ 1.5 billion from investors led by Goldman Sachs Group Inc., placing an assessment of 50 billion dollars on the business closed.Facebook, founded in 2004, passed Google year last to become the site most visited in the United States, according to Experian Hitwise, an Internet-monitoring in New York society.

-Editors: Nick Turner, Sylvia Wier

To contact the reporter on this story: Brian Womack in San Francisco at bwomack1@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net.

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Victory of Facebook Court applies Settlement Winklevoss

April 11, 2011, 6: 41 pm EDT by Karen Gullo and Joel Rosenblatt

(Updates with Attorney Winklevoss application control in the sixth paragraph).

April 11 (Bloomberg)--Facebook Inc. has won a court decision to enforce the regulations of a founder of the company claiming prosecution Mark Zuckerberg stole the idea of what has become the largest social networking site in the world.A panel of three judges of the Court of appeal of the United States in San Francisco today decided unanimously that the contract was "valid and enforceable," stressing that the released regulations Facebook of all claims.The Court dismissed the claims of the Harvard University classmates old Zuckerberg, twins Cameron and Tyler Winklevoss, who argued that the 2008 agreement should be cancelled because Facebook did not disclose an assessment specifies actions before agreeing to settle for 65 million dollars in stock and cash to limited participation. That year, a lower court ruled that the agreement was binding on. "With the help of a team of lawyers and a financial advisor, they made a deal that appears quite favourable in light of these recent market activity,"the Court said, noting that Facebook based in Palo Alto, California is now estimated at 50 billion in revenues3"33 times what the Winklevosses thought to mediation. "" For some reason, they want to now back out ", the Court said in today's decision. "As the district court, we see no basis to enable them to do so." At some point, litigation must come to an end. That has now reached a point. "The Winklevosses will request a larger panel of judges on the Court of appeal in San Francisco to consider the case, said Jerome Falk, an attorney for the brothers. "Extremely important issues"In my judgment, opinion raises extremely important questions of federal law which deserve consideration by the Ninth Circuit Court of Appeal set,"Falk, said in an e-mail. "For this reason that my colleagues and I will file a petition for a rehearing en banc within fifteen days following."Facebook welcomes the decision, Colin Stretch, Advocate General Assistant to the company, said in a statement by e-mail.Today's decision confirms the agreement between the Winklevosses and Zuckerberg, whose twins committed to help build dating from ConnectU Inc. website while they were students at Harvard, Cambridge, Massachusetts, in 2003. The Winklevosses and a partner, Divya Narendra, initially accused Zuckerberg in a trial for stealing their idea and delay project ConnectU, while the building secretly Facebook.Falk said the Court in January that Facebook committed securities fraud because a price on the exact part "not disclosed to the founders until after the subscription"."they have signed," describing the conditions of the agreement. Force the Winklevosses to accept the settlement would be "immunizing fraud in mediation," he said. "Sophisticated Parties'Joshua Rosenkranz, a Facebook lawyer and a partner in New York from San Francisco Orrick Herrington & Sutcliffe LLP Office, replied that the Winklevosses and the Narendra were, at the time, they signed the agreement," sophisticated parties surrounded by a platoon of lawyers "which the main objective of the negotiations was own 0.3 per cent of Facebook. They reached a settlement of binding which makes their "richer by the day", said Rosenkranz.En February 2008, the two parties arrived at a settlement through mediation would pay founders of ConnectU 20 million in cash and 45 million dollars in stock or 1.25 million shares based on a price of $35.90, according to Falk, a partner at Howard Rice Nemerovski Canady Falk & Rabkin in San FindingWithin de Francisco.Expert a couple of months of signing this agreement, counsel for the learned ConnectU that Facebook had accepted the conclusion of an expert that the price of the strike for employee stock options was $8.88 per shareFalk said. Based on this award, the Winklevosses should have received four times more actions that they have obtained, according to Falk.Falk said in January that the 2008 regulations is now valued at $ 100 million more than the amount of his originalAfter Goldman Sachs Group Inc. has invested $ 450 million, in the social networking site to stimulate the assessment of the business to $ 50 billion. The investment was for the first time in January.The case of Goldman Sachs is the Facebook Inc. v. ConnectU Inc., 08-16745, 9th Circuit Court of appeal of the United States (San Francisco).

-Editors: Stephen Farr, Peter Blumberg

To contact the reporters on this story: Karen Gullo in San Francisco at kgullo@bloomberg.net; Joel Rosenblatt in San Francisco at jrosenblatt@bloomberg.net

To contact the editor responsible for this story: Michael Hytha to the mhytha@bloomberg.net

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Facebook said claimant there he owns half of the electronic evidence

April 11, 2011, 10: 05 pm EDT by Bob Van Voris

(Updates with excerpts of complaint in paragraph 12).

April 11 (Bloomberg) - Paul Ceglia, who said that a contract for 2003 with the co-founder of Facebook Inc. Mark Zuckerberg entitles him to 50 percent of the company, said in a new Court that he has emails from Zuckerberg to prove its deposit request.The complaint filed today in Federal Court in Buffalo, New York, includes the new allegations in support of claim of the Ceglia to possess half of Facebook, more great social networking site in the world, including that sent many emails Zuckerberg discuss the terms of the contract and the beginning of the development of "The Face Book" with Ceglia. "" They are exactly what you would expect between two people who are trying to develop a Web site, ", said Robert Brownlie, a lawyer for Ceglia, referring to emails in a telephone interview.Ceglia alleges that Zuckerberg want him lie on the success of "the Face Book" at Harvard University, where Zuckerberg was a student at the time. Ceglia says that he is entitled to half of Facebook, a company closely as much as 55 billion dollars, according to Sharespost.com, an online investment market in companies that are not listed.In the complaint, Ceglia claims "its time, ideas, know-how and other 'sweat equity'", it contributes at the beginning of Facebook. "Fraudulent prosecution '"it's a false lawsuit filed by a convicted felon, and we look forward to defend before the Court,"said Orin Snyder, a lawyer for Facebook, in a statement by e-mail. Snyder may refer to advocacy of 1997 of the Ceglia possession of hallucinogenic mushrooms in Carthage, Texas. Ceglia was sentenced to a fine of $15,000 and allowed to return to the State of New York, according to the records of the Court from the outset, we said that this scam artist claims are ridiculous, and this latest complaint is not better"," Snyder, partner of the firm of Gibson, Dunn & Crutcher LLP, said in the statement.Ceglia originally brought an action before the Court of the State of Allegany County on June 30, New York claiming a two-page "work for hire" contract Zuckerberg signed in 2003, while he was a 18-year-old freshman at Harvard Universitythe right half of the company Ceglia, more than 1% per day has delayed the start of the site, called "the face book,". At the time, the total demand of Ceglia was 84% of Facebook. The case then was transferred to the Federal Court in Buffalo.Dropped ClaimIn the new complaint, Ceglia is seeking half of the company, saying: he dropped its claim for the additional percentage at the request of the Zuckerberg. "Zuckerberg sent to Ceglia emails complaining that a provision of the agreement giving Ceglia additional interest of 1% in the company for each day after January 1, 2004, that the website"face book"was not complete, was unfair because it would give Ceglia more than 80 per cent of the entreprisey property includes the website thefacebook.com"Ceglia said the new complaint."The allegations in the complaint of alleged Zuckerberg, Facebook and others dispute that Zuckerberg designed the Web site as a Harvard sophomore in 2004, not in 2003 as Ceglia claims.Craigslist AdAccording to the complaint, Ceglia hired Zuckerberg in an ad on Craigslist.com to write the code of the computer for a project called the Ceglia StreetFax.com. After several telephone conversations, Ceglia agreed in April 2003 to pay Zuckerberg $ 1,000 for work on StreetFax more than an investment of $1,000 in "the Face Book", which was just Zuckerberg.Ceglia and Zuckerberg met in the lobby of the Radisson Hotel in Boston on April 28, 2003where they signed the contract, said of Ceglia.Selon e-mail, Zuckerberg was asked if he could adapt the source code of StreetFax for use on face book. And in an e-mail, on September 2, 2003, Ceglia deterred Alumni pricing Zuckerberg a monthly fee for the use of the site.Maybe we could he open up to what it was popular and start filling? "Ceglia suggested, according to an excerpt.In an e-mail dated November 22, 2003, Zuckerberg said Ceglia: "I recently met with a couple of upperclassmen at Harvard here planning to launch a site very similar to ours." If we do not make a move soon, I think that we will lose the benefit we would have if release us before them. I won their for the moment, "Zuckerberg said, before asking another $ 1,000 of Ceglia, according to the newspapers." "Women and Beer'On January 5, 2004, Ceglia questioned Zuckerberg on when he expected to launch the book of face, according to the complaint. "I'm beginning to think that you blew all this money, Mark,"Ceglia reportedly said in an e-mail." "You know perfectly well that you take just the placement of a person and then pass it on women and beer or any that you until it y at Harvard.".Later, after Zuckerberg launched the site, he would have dismissed the idea of selling Ceglia college T-shirts and mugs on the book of face, saying in a February 6, 2004, e-mail: "I feel that I have to take creative control and I can't risk just injuring a reputation of my site by it depletes with your idea of". sell junk College. "In the complaint, Ceglia said that Zuckerberg hacked his site Web StreetFax"on several occasions, "change the code and force them to close, when Ceglia refused pay Zuckerberg more that they had agreed for his work on the project." "The case is Ceglia v. Zuckerberg, 1: 10-cv-00569, U.S. District Court, Western District of New York (Buffalo).

-Editors: Peter Blumberg, Michael Hytha

To contact the reporter on this story: Bob Van Voris in U.S. District Court in Manhattan to rvanvoris@bloomberg.net

To contact the editor responsible for this story: Michael Hytha to the mhytha@bloomberg.net

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