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Facebook and CEO Mark Zuckerburg have been given 30 days to respond to a law suit filed against them by web designer Paul Ceglia, who claims that a contract he has, signed by Zuckerburg in April 2003 entitles him to a colossal 84% stake in Facebook.
Not only do Facebook have to respond to the suit in the next month, the judge in the case also put in place a temporary restraining order against Facebook, preventing them or Zuckerburg from trasferring any assets whatsoever while the case is investigated.
So what is Mr. Ceglia basing his law suit on?
According to the web designer, Zuckerburg signed a contract with him seven years ago for £660 and 50% of the site he was designing, which became thefacebook.com. The suit also says that Paul Ceglia was entitled to an additional 1% interest in the company for every day it took after Jan 1st 2004, until it was completed.
A crucial term in the contract states:
It is agreed that the Purchaser (Paul Ceglia) will own a half (50%) interest in the software, programming language and business interests derived from the expansion of the service to a larger audience
This isn't the fist time Facebook have run into legal difficulties in the US, in 2007 three ex-Harvard classmates of Zuckerburg and founders of social networking site ConnectU claimed that the Facebook CEO stole his business plan and coding from them. At first the parties reached a confidential agreement with Facebook, although that agreement was changed in 2008, giving ConnectU around $65million in cash and Facebook stock.
According to a Facebook spokesperson, the social media giant will fight in the courts rather than simply paying off the web designer, stating:
We believe this lawsuit is frivolous and we intend to fight it vigorously
So it will be interesting to see what the outcome is; I'm fairly sure that with all these things, money and influence will win out in the end but Facebook may well end up having to pay off Paul Ceglia, which just goes to show you need to be careful with your contracts. Who knows what kind of trouble a little bit of data can get you into, eh Mr Zuckerberg?