Facebook claimants poking Zuckerberg again

Three Harvard graduates are trying to ramp up a $65m settlement they made with Facebook over who came up with the idea for the site. It's the principle, you see.

by Dave Waller
Last Updated: 08 Feb 2011
Olympic rowing twins Tyler and Cameron Winklevoss and partner Divya Narendra accuse Mark Zuckerberg of stealing their idea for the website, which last year became the most visited in the world. They’ve already settled this once, and made a cool $65m in the process, but now they’re saying Facebook misrepresented its stock price and that they should’ve been given even more. But, of course, it’s not about the money.

Zuckerberg has always denied their accusations, but agreed the original deal back in 2008 to put an end to the ‘rancorous litigation’. That clearly didn’t work. Perhaps his foes are keen on creating a sequel to The Social Network, the Oscar contender movie that came out this year dramatising the original spat.

The storyline is as follows: the three founded ConnectU and originally hired Zuckerberg to work on their own site, called HarvardConnection. They reckon Zuckerberg then stole the idea for himself.

This potentially lucrative epilogue pits the two sides against each other once more in a San Fransisco appeals court. The claimants are asking the court to undo the original settlement so they can pursue Facebook for more moolah. Their original settlement included $45 million in private Facebook stock, and they’re arguing that the company failed to disclose at the time that it had approved a valuation of $9 a share. Facebook signed over 1,253,000 shares, but the claimants’ lawyers reckon they should have been awarded four times as many shares as they were given.

Thanks to the recent deal with Goldman Sachs, the value of Facebook is now around $50bn, so the claimants' shares have now more than doubled in value to $140m. Honestly, how much do these people need before they’ll let something lie?

But, we should reieterate, it’s not about the money. According to the lawyers: ‘The principle is they [Facebook] didn’t fight fair… Mark stole the idea’. Mark also happened to be named person of the year by Time magazine last year – and that’s bound to rankle.

Being Olympic rowers, the Winklevoss twins clearly know the benefit of persistence. And they’re used to playing for high stakes: if they win, they stand to receive a much larger payout. Lose and they’ll forfeit the original $65m, which to most of us is a huge sum to make from having a social networking idea and not doing anything with it.

In an interesting sub-plot the Winklevoss twins are now being sued by a former partner of their own. Wayne Chang reckons he’s entitled to a portion of the original $65m settlement made with Facebook, because he built a file-sharing network i2hub that was later merged with ConnectU.

Such endless chains of sub-suing are a peculiarly American phenomenon, and it makes you wonder where it’ll end. Presumably with the guy who delivered the pizza to their original brainstorming session, claiming his slice of the pie for meat-feast based inspiration…

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