The Facebook Lawsuit: Everybody Calm Down and Remember Your 1L Contracts Class | Hacker News Reader

The Facebook Lawsuit: Everybody Calm Down and Remember Your 1L Contracts Class

abovethelaw.com

44 pointskeltecp1128 comments

The best analysis of the lawsuit I've seen comes from grellas' brilliant posts here on HN[1]:

http://news.ycombinator.com/item?id=1537158

http://news.ycombinator.com/item?id=1510528

[1]Which, as a side note, drives home just how much better HN is than most other places on the internet, we got lengthy analyses, almost everywhere else was overrun with re-phrasings of "Oh boy Zuckerberg's fucked now!".

I disagree with the doctrine of laches being applied to this case. It doesn't make any sense for Ceglia to risk time and money to sue for a company that has just recently become "cash flow positive" let alone break even.

Investors in Facebook should have the concept of "due diligence" applied to them. Trading in pre-IPO stock is not and should not be safeguarded like regular equities or FDIC insured bank deposits.

Ultimately this is Zuckerberg's fault, and any settlements from this case should be paid from his assets.

I think it all rests on whether or not the statute of limitations started ticking before July 2004. According to New York Civil Practice Law & Rules - § 213, which I believe is pertinent to the case, it mentions "two years from the time the plaintiff...could with reasonable diligence have discovered it".

I'd suggest that the doctrine of laches is completely valid in this case. Facebook isn't just a company that has "recently become cash flow positive", it's a company that's been highly valued for at least six years. In June 2004 Peter Thiel invested $500K for 7% (giving it a valuation of $7.1M) and Accel Partners invested $12.7M in May 2005 (valuation ~ $100M). I'm not sure you can say it would be a waste of time to sue for ownership of Facebook as it existed at either of those points as it was clearly valued by astute investors.

The problem with that line of thinking is that those valuations would have only been possible with Zuckerberg and his cadre of Harvard branded friends at the helm of Facebook.

If Ceglia exercised his right to those shares so early in the stage, those people could have easily been poached by Google or started another company.

Just because Peter Thiel and other investors valued it highly doesn't make it so. Would you agree with his investment in largely failed Friendster? No one should be beholden to imaginary valuations by pre-IPO investors who have a higher tolerance for risk.

Just because Peter Thiel and other investors valued it highly doesn't make it so.

Surely the value of the company's shares is however much investors are willing to pay for them?

That's only true for public shares. $10,000 from Thiel is different from $10,000 from Joe Sixpack.

On the other hand, it shows how dismal the entire internet is as a whole that only a single lawyer bothered to provide any form of analysis on the issue here.

I find "remember you <class> 101 course" pretty pointless. Nearly every class I ever took began with simple stuff and then the following years you learnt why that was all wrong, not quite the truth, or how you work around those rules :-)

However, when the "101" answer does turn out to be the right one, it is a nice shorthand to be able to say "remember your XYZ 101"---i.e. not everything is an exception. In this sense it's related to the saying "don't miss the forest for the trees."

It doesn't work that way in law school. Your 1L contracts class is likely your only contracts class.

An intelligent attempt to encourage amateurs to avoid speculating about things they know nothing about. As with anything vaguely complex or esoteric, the media talking heads are pretending that they can break down a complicated issue (like contract law) into 30 second talking points and thus end up oversimplifying and misleading the general public.

Fortunately, this sort of issue (esoteric, complex and intractable to 30 second analysis by 24-hour news networks) tends to fade quickly from the headlines, so with any luck, we won't have to endure the idiotic platitudes of news anchors and their paid analysts for much longer.

This provides no new insight or any real insight at all. Of course we don't know what the clarity of the contract is yet. No one is claiming it's clear either. That's the purpose of the courts and a judge.

This provides no new insight or any real insight at all.

He makes a fairly straightforward argument that it makes no difference that the contract refers to something as 'The Face Book'; if Facebook, the subsequent project and company are not what the contract is about then Ceglia does not have a claim to 84% of Facebook, Inc.

No one is claiming it's clear either.

Henry Blodget describes an aspect of the contract as 'crystal clear' and that's what the author is commenting on.

Now, maybe you disagree with the author's analysis but 'no insight at all' and 'no one is claiming it's clear' are a bit of a stretch.

Jason is mark in trouble here... Curious for your personal opinion.

Sure, I'll add in my speculation:

IF it's not an entire forgery: There will most likely be a large settlement here. The guy won't want to go through the legal troubles associated with the case since it will take years. He's not like Aaron or the twins, which saw more than just money in the case. Paul Ceglia wants his money. Facebook will also not want to go to court on this one as the PR drags out and there's a decent chance that something devastating could happen. The question is: What's the PR play? If FB settles for a large sum of money very quickly it will just add to the line of people that Mark "stole" the idea from.

There's also a chance that it's a forgery or gets thrown out on a technicality. Here's my somewhat logically, but still randomly decided likely outcome %s:

Facebook Settles For Large Amount of Cash: 45% The entire thing is a forgery: 25% It gets thrown out on a technicality: 30% Goes to court, Facebook loses (likely in 2012), devastation: 5%

well articulated j.

gracias Pete. Call ya later to wish you good luck on the bar this week.

The point the "The Face Book" might not refer to the initial implementation of what we now know as "Facebook" is a good point, and I'm sure Facebook's lawyers will beat it to death.

The idea that not registering the domain name is some kind of proof that you aren't working on something sounds absurd coming from an obviously intelligent person. Maybe you could find a judge that is so technically unsophisticated to let that one fly, but the opposition won't.

I agree with the commenters that way that Paul Ceglia just wants his money. If he waited this long to attempt to grab a piece of Facebook, it seems unlikely he'd turn down a large settlement in return for a chance to fight Facebook's lawyers for the company.

I'm really curious if this fellow approached Zuckerburg and tried to settle this via less public avenues.

I really don't understand the argument here. "It was a year before he registered the domain so he probably hadn't thought of it"? Well... except we have a contract that mentions it.

I believe the site we now know as facebook was, as recently as a couple years ago, referred to by its then primary user base, college students, as 'The Face Book'.

I hope the guy wins. This would be the most awesome justice I can think of in my lifetime. Well, if only the plantiff actually deserved to win... but the defendant, I'm confident he deserves to lose.

Whether or not Zuckerberg "deserves to be punished", are you really advocating that all other investors and employees are "acceptable collateral damage"?

This doesn't affect the employees, just the investors. You can't blaim Paul Ceglia for Zuckerberg trying to trick him out.

Facebook's employees have stock options, have they not? And Ceglia is not without his own tricks.

(None of the above should be misconstrued as liking Facebook or Zuckerberg; I'd be pretty happy to see the privacy nightmare that is Facebook disappear, even if some more-or-less innocent people lost money. I just don't think dislike of Zuckerberg alone is enough reason.)

Just because you were promised a part of "stolen" property doesn't mean that you are entitled to it afterwards when it gets returned. All their anger should go against Zuckerberg promising parts he wasn't entitled to, if this turns out to be true!

Let's see how this goes out :-)

I'd still rather have a million dollars than some righteous indignation.

What, you think this would make facebook go out of business? And yes, you invest in a company built on a stack of shit founded by a scoundrel - your fault, your problem.

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