Facebook Fights New Yorker's Claim of 84 Percent Stake

Facebook has moved to overturn a New York judge’s recent order temporarily blocking any transfer of the company’s assets, as the world’s No.1 social networking responds to a lawsuit by a New Yorker claiming to own 84 percent of the company. In a civil lawsuit filed in the Supreme Court of New York’s Allegany County last month, Paul Ceglia said he signed a contract with Facebook co-founder Mark Zuckerberg in 2003 to develop and design a website. The terms of the contract entitled Ceglia to a $1,000 fee and a 50 percent stake in the product, which eventually was launched as thefacebook.com, according to the lawsuit. The contract also stipulated that Ceglia “would acquire an additional 1 percent interest in the business, per day, until the website was completed,” and the suit said that by Feb. 4, 2004, Ceglia’s stake in Facebook totaled 84 percent.

Facebook called the suit completely frivolous. The company said the case has been moved to federal court, where Facebook has asked that Allegany Court Judge Thomas Brown’s recent order restricting the transfer of Facebook assets be struck down. “The order will not affect our ability to do business but we do not believe it is legally supported and we have moved to have it vacated,” said Facebook’s Barry Schnitt. Facebook, which has nearly 500 million users, is the world’s No.1 Internet social networking service and ranks among the Web’s most popular sites, alongside Google Inc, Yahoo Inc and Microsoft Corp. The privately held Facebook is also one of the most closely-watched Web companies by investors eager for a blockbuster initial public offering. Ceglia and his attorney could not immediately be reached for comment.

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