"Work for Hire" Contract Submitted as Evidence in Ceglia v. Facebook
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Second is the conditioned 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 website similar to a live functioning yearbook with the working title of "The Face Book".
It is agreed that the purchaser will own a half interest (50%) in the software programming language and business interest derived from the expansion of the service to a larger audience.
And goes on to say he gets 1% more of the business every day its not completed after Jan 1 '04.
Thats a pretty valuable piece of paper this guy has held onto for the last six years, their lawyers will make a lot of money on this if its not a forgery.
http://www.scribd.com/doc/34239119/Ceglia-v-Zuckerberg-compl...
I personally doubt stockholders will lose a single share no matter what happens.
Looking at the Ceglia/Zuckerberg contract, I got chills, and began digging into my old documents, looking for that contract. The last thing I want is to find out I signed 50% of earnings away.
I discovered that I did sign 50% of my earnings away! Fortunately, the agreement was between their company and my now deceased startup. I'm glad my startup failed..
50% of something is more than 100% of zero, you know.
Not surprising it failed if you ask me, given the attitude.
Not to say 50% is not brutal or anything for a contract.
With Facebook now taking the "we don't know if he signed it, but if he did it's invalid anyway!" argument it looks like Zuckerberg may indeed have put pen to this paper.
My guess would be either he assumed it was contracting boilerplate and didn't read it properly (based on the memories of my behavior in my early 20's, fairly likely), or just skipped over the single paragraph with criminally bad English that referred to the purchase and design of "The Face Book".
This will be interesting.
I think the best argument you can make for the possibility that Zuck did not sign this contract is that he did not sign it, but does not want to be brought to the witness stand for some reason, so he has told his lawyer not to make the validity of his signature an issue of contention but to try to attack the contract on other grounds.
I'm having trouble seeing what your point of disagreement is.
From what we both said, if the lawyer believes or knows that the client did not sign, the lawyer should make that argument. But the lawyer will also make arguments in the alternative, arguing that even if the client did sign, they should still win the case.
That looks like agreement, not disagreement.
In any case, Rumpelstiltskin's contract probably wouldn't be honored in a court of law.
The signed contract seems to be the main evidence Ceglia is counting on - earlier in the case he said allusion to surprising people when the evidence comes.
So it seems plausible the signature is valid though this naturally doesn't mean Ceglia's suit will succeed.
Considering that his lawyers are "unsure" he signed the contract, this is basically an admission that the contract looks valid at first glance, and that the lawyers are probably spending day and night trying to get it dismissed on a technicality, or hoping it is a forgery.
It will also be interesting to know if people here think Ceglia deserves those Facebook shares. Many people here are investors and would probably side with him, but others have expressed the sentiment that he provided a negligible amount of money and therefore contributed very little to the success of Facebook.
Interesting, I always thought most HN were starving poor hackers :)
That's what interests me most about this. I'm assuming this will come to some settlement that won't destroy facebook, and will probably give this guy some money. I'm curious about the ethics involved. Is contract law so inviolate that most people here would advocate honoring it?
Facebook's army of attorneys may ultimately win the day on technical grounds, but if this contract is legitimate, I'd hate to see the plaintiff lose out on a lucky investment because he was an unsophisticated investor.
Incorrect. A 17 year old can sign a contract, they just have the option of voiding the contract until they turn 18. (Which is why most people avoid signing contracts with minors.) Once they turn 18 they no longer have the option of voiding the contract.
There may be a period you can dispute the contract while 18 but not indefinitely. I don't remember all the details but I do know that contracts signed with minors are valid just very risky for you.
As for the sleazebag count, I'm not sympathetic at all. If it turns out that Zuckerberg did sign the contract in good faith, and that he did subsequently ignore it when Facebook blew up, that's pretty crooked. Maybe you can argue that he simply forgot about the contract, but that goes back to idiocy -- wouldn't you remember the guy who gave you $1,000 to buy a 50% stake in your company?
No, something is fishy here, and if the contract is real and not signed under duress it doesn't speak well to his judgment. Considering the history of claims against him, I'm not willing to assume that Zuckerberg is a boy business genius while simultaneously forgiving huge legal gaffes like this one.
Assuming that the contract was made in good faith, he had the opportunity to counsel a lawyer, the other guy didn't lie to him, etc, etc. Then yes I would normally believe the contract should be honored - it is bad horrible contract from Zuckerbergs perspective, but it is still a contract that he signed.
However this was a long time ago, and since the guy didn't show up until now it don't think it is fair to actually give him the procentage of facebook - a lot has been sold to the investors and he could should have shown up years ago.
How about 50% of just Zuckerberg's share? Surely that would be fair.
This will be felt in the VC industry, believe you me. The VC and angel investor industry relies on the big payoff and if the biggest payoff in recent history turns out to be a dud, then there will be much less demand for new investments and the few investors that remain will insist even more on professional CEOs to swoop in and take things over.
So this is something to think about. Of course, it does not mean he should not get the shares if he has a right to them legally, but the repercussions of this can be huge.
If it turns out that Ceglia and Zuckerberg each owned 50% of Facebook in 2003, their ownership would each be diluted down in subsequent rounds of financing (from the "Investors").
So if the equity capitalization before this lawsuit is assumed to be "Investors" - 40% and Zuckerberg - 60% (an example), the new capitalization if Ceglia wins would be Investors 40%, Zuckerberg 30% and Ceglia 30%.
No impact on "Investors" ownership.
> "It is acknowledged that this is a work made for hire agreement and that all Intellectual property rights or patent rights are that of Streetfax Inc. [...] In the event that StreetFax defaults on its payment terms rights would be granted to seller."
Did StreetFax pay to get "The Face Book" running? Because if they did, why wouldn't they own it and have it running? If they didn't pay, they've got no case whatsoever.
On the other hand, it is extremely unlikely he will get anything near the order of magnitude of what he's asking for, unless the judge well and truly hates, and I mean hates Zuckerberg and facebook. And the appeals judge, and so on, up the chain.
One reason for this is that the judge is going to be weighing on the one hand this guy's thousand dollar investment, and on the other hand, everybody else's millions of dollars of investment, and asking if harming the millions of dollars of investment is proper on behalf of the guy who put in $1k.
If Zuckerberg is determined to have signed this all away, then the incorporation and all the shareholder agreements, and statements, etc. are void and fraudulent. This impacts not just Zuckerberg, but the other parties he is in business with.
It is nearly inconceivable that a judge would trash the entire corporate structure of Facebook based on this suit. Now, that said, he may sit Z down and say "I'm dumping this problem on your lap, fix it, buddy" by leaving the door open for personal fraud claims and damages to the corporation.
Regardless, in the end a judge is going to be asked if a $1,000 passive investment really should be worth billions of dollars in 6 years. The answer to that question in our country is 'no.'
Also, no way in a cold and frozen hell will DST and MS allow this guy to sit on the board and vote shares. The legal forces arrayed against him are going to be seriously, seriously formidable.
Look for a multimillion dollar settlement. Less than $100mm.
Yeah, rules only apply to the little guys. Contracts should only benefit the big, rich organizations.
I would hope that in this country, if the investment is backed by the proper legal documents, that the answer would be yes. that whole rule of law thing.
Otherwise, are you saying that if one makes an angel investment of $1K for 10% of a company, that a judge should back other larger deeper-pocketed investors against the angel primarily because the judge would ask "if harming the millions of dollars of investment is proper on behalf of the guy who put in $1k."?
In general, American judges have tended to care about this sort of thing -- they are very corporation friendly, especially to reasonably good corporate citizens.
This judgment if done quickly and at the rate asked for is largfer than most tobacco company rulings; and they have knowingly been addicting and killing hundreds of thousands of children around the country! (And have in some cases taken many, many years to wind through the courts.)
In short, if you put in $1k into a startup, and then those guys abandon it, go start a new company with your technology and raise a million dollars, you damn well better be in touch with those founders and investors early if you want to protect your investment.
Think about that for a second: you're a passive investor, hence don't add value to the company outside your money. You put in enough money for one month's rent in Harvard Square. Now, you get outside investors who have put in, say a million dollars. No matter what your agreement with the founders, who invented all this stuff, what do you think the million dollar funding group will offer you when you start rattling their cage around the time of closing the round?
The point is, if he has a real claim, and if he had pursued it as he should have, he still would, right now, own much less than Zuck does if he'd had any sort of quality angel or Series A investors. A guy that takes 50% for $1,000 is NOT an angel. He's either total smallfry or a predator or both; he wouldn't be welcome around the table with legit investors, and he almost certainly would have been bought out for either a small amount of nonvoting stock, or cash, like say $50k.
This would be different if he and Zuck had sat side by side for a year, working on features and split equity based on that, very different, but that's not the situation, no matter how much of a tool Zuckerberg was at that point in his life.
Also, oddly one instance says "The Page Book" while another two say "The Face Book."
http://www.scribd.com/doc/34239119/Ceglia-v-Zuckerberg-compl...
But, the alleged contract is harder to read in that copy.
updated to point to page, thanks qhoxie!
Page 14: http://www.scribd.com/doc/34239119/Ceglia-v-Zuckerberg-compl...
It could turn out that he paid $1,000 for the StreetFax project but they both abandoned the original "The Face Book."
This is obvious.
Why would you sue over a company that might not even turn a profit or could go bankrupt the next day while the founders are poached by Google, leaving you with an empty shell of a company?
The answer: you only sue when a company starts making money. And for Facebook, that has happened only very recently.
Here's the link I got:
http://docs.docstoc.com/pdf/7291/39b8d9a6-aa9b-4faf-92c6-baf...
If so, this whole thing just degenerates into two sets of lawyers figuring out how much it takes to make him shut up and go away.
But, I thought there was a list of things that are normally works for hire (without that being explicitly specified), and a list of things that are allowed to be specified as works for hire, and that software isn't on either list?
So unless my coffee did not kick in yet; that would make him under or around the age of 18 which is below the age of majority in NY state:
I would imagine typos could affect a contract - would that be the case here?
Is it because Zuckerberg is now rich/powerful? Are we being more lenient to those folks now? Because these are the folks, the ones without integrity but with money/power in our society, that are ruining US. These are the folks that are crashing people's 401k, devaluing the dollar, giving bailout money to their buddies, shipping jobs overseas, cheating, lying, and stealing their way to the top. These are the folks that are bankrupting our world. Pretty soon, one day you wake up, you'll have the social security/medicare benefit disappear. your house will be worthless, and so will your 401k. After you've worked hard for 30 years. Maybe then you'll hate the Mark Zuckerbergs of the world.
Whatever bad Zuckerberg has done, it doesn't seem especially plausible that Ceglia made a contribution significant enough to merit a percentage of Facebook.
At the same time, if the contract is authentic, it seems like there's a big back-story here you'd have to learn before making any judgments here.
And, hey, I'll admit I'm really curious what that story is.
Regardless of what happens, it should prove interesting.