
"Work for Hire" Contract Submitted as Evidence in Ceglia v. Facebook - OoTheNigerian
http://www.docstoc.com/docs/47683098/Work-for-Hire-Contract-Submitted-as-Evidence-in-Ceglia-v-Facebook
======
hop
I thought this was just a boilerplate work for hire contract, but on pg 11 it
surely says:

 _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.

~~~
zweben
Page 11? I only see two pages. What am I missing?

~~~
hop
Sorry, its the 1st page under "2. Entire Agreement" (I was looking at the
whole lawsuit - [http://www.scribd.com/doc/34239119/Ceglia-v-Zuckerberg-
compl...](http://www.scribd.com/doc/34239119/Ceglia-v-Zuckerberg-complaint) ).

------
shughes
A few years ago, I signed a contract with an awful web startup. At the time, I
was laughing on the inside because I thought it was funny how much they (two
brothers) wanted to pretend they were a legitimate company. One brother was
the "CEO," and the other brother was "Vice President." So like a CEO, a VP,
and then no employees..

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..

~~~
cpg
How typical.

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.

------
ajg1977
This whole thing is just... bizarre.

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.

~~~
btilly
It is a lawyer's job to put forth every argument that can make their client
win. Even if the lawyer believes that the client didn't sign, they can't stand
on the truth because the judge may not believe them. So they have to argue
both sides of every disputed fact. So they say that they don't think our
client signed. But even if he did, it is too late to bring this case so our
client still wins. That way no matter which version of the facts the judge
accepts, they can win.

~~~
hristov
I don't agree with that. If the lawyer knows for certain that Zuck did not
sign they should just say he did not sign. That will not prevent them from
making arguments in the alternative, such as "even if he signed, the contract
is invalid on other grounds." While these kind of arguments may seem a little
disingenuous to the ordinary person, they are accepted and made in the
courthouses all the time.

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.

~~~
joe_the_user
I'm not a lawyer but from the last time I had to deal with contracts, I recall
that contracts with irregular or completely unjustified terms actually can be
thrown out by the courts.

~~~
eru
Happens regularly in Germany for tenancy agreements, even for quite reasonable
stipulations.

~~~
joe_the_user
As I remember, US residential agreements are quite restricted because the
average renter isn't expected to have any legal sophistication. Commercial
lease are much less restricted because a commercial leaser is expected to more
sophistication.

In any case, Rumpelstiltskin's contract probably wouldn't be honored in a
court of law.

~~~
gte910h
Unconscionably is still ground for invalidation here too.

------
famfam
Who here thinks that Zuck has always known about this contract? And has been
praying every day that Ceglia had forgotten about it / died / etc. And the
stress and stakes rose day after day, Zuck dying on the inside like w/ the
tell-tale heart, stress coming through the cracks at his AllThingsD meltdown,
etc...?

------
wallflower
I wonder if they are doing some last-minute editing on the ending of the
Facebook movie.

~~~
richardw
And the first 10 minutes, where a tired student with a hangover signs a piece
of paper without reading it too well.

------
codexon
If this contract is real, this is bad news for Zuckerberg.

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.

~~~
blueberry
_Many people here are investors and would probably side with him..._

Interesting, I always thought most HN were starving poor hackers :)

~~~
megablast
Many and most are not the same thing. Many people here could be investors,
while most could be poor hackers.

~~~
blueberry
True, but if that's what he meant, then his sentence doesn't really have a
point.

------
lionhearted
Interesting. Clause 9:

> "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.

------
vessenes
Okay, on the one hand, this guy will surely be seeing some money, unless it's
a forged signature, in which case, he will surely be going to jail.

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.

~~~
jpark
"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.'"

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."?

~~~
vessenes
Depending on the incorporation structure that Facebook has, and the stated
shareholder disclosures and shareholder agreements signed, this could cause
serious difficulty for other investors, and possibly employees of Facebook.
Those are real damages, and judges can and will consider them along with the
$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.

------
invisible
Shouldn't he have to prove he paid $1,000 to Zuckerberg? We may not be getting
all of the facts in the case, so it's questionable whether this is valid on
the terms themselves.

Also, oddly one instance says "The Page Book" while another two say "The Face
Book."

~~~
gojomo
The full filing includes an alleged check carbon regarding the $1000; you can
view it at Scribd (p. 14):

[http://www.scribd.com/doc/34239119/Ceglia-v-Zuckerberg-
compl...](http://www.scribd.com/doc/34239119/Ceglia-v-Zuckerberg-
complaint#page=14)

But, the alleged contract is harder to read in that copy.

 _updated to point to page, thanks qhoxie!_

~~~
invisible
Not to sound dense, but shouldn't there be two checks if this is how he hopes
to prove he paid? One for the StreetFax and one for The Face Book project? Or
does it say something about The Face Book in the memo (cannot read)?

It could turn out that he paid $1,000 for the StreetFax project but they both
abandoned the original "The Face Book."

~~~
gojomo
Yes, I'd agree there's a chance that this contract (if real) was canceled by
mutual agreement (or de facto non-performance by both sides) before the real
Facebook work began. That's why it'd be interesting if Zuckerberg's email
archives of the era include any exchanges with Ceglia. Just a couple of words
between them indicating any different understanding could make all the
difference.

------
zemaj
Why would someone sit on something like this for 7 years? I can't think of any
reasonable explanation. Facebook's lawyers also seem completely unprepared.
How could Mark not have seen this coming? There's got to be an interesting
story here.

~~~
codexon
_Why would someone sit on something like this for 7 years?_

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.

~~~
gte910h
Yeah, for the plaintiff though, he may run into some very real statute of
limitation issues. Had he waited just 6 months less, he'd be in a much better
position.

------
decklin
Is there a link to an actual PDF instead of a Flash viewer?

~~~
Timothee
If you change your user agent to an iPhone's (and maybe other mobile devices)
you get to download a PDF directly.

Here's the link I got:

[http://docs.docstoc.com/pdf/7291/39b8d9a6-aa9b-4faf-92c6-baf...](http://docs.docstoc.com/pdf/7291/39b8d9a6-aa9b-4faf-92c6-bafae4080973.pdf)

------
gojomo
Other lawsuits have already plumbed Zuckerberg's email and other personal
documents from this era... including a personal journal. Did Ceglia and his
'StreetFax' project appear in any of that? Is there any independent evidence
Ceglia and Zuckerberg met?

------
ibejoeb
I just can't conceive of Ceglia's claim holding. It seems that, regardless of
the authenticity, systems are in place to prevent Facebook from undergoing
such a drastic shift. Can anyone relate this to similar circumstance?

------
HeyLaughingBoy
Obligatory IANAL, but I don't see why this is such a big deal: the corporation
that currently owns Facebook almost certainly didn't exist when this was
signed (let's assume it was!). So Ceglia's claim is against Zuckerberg, not
Facebook. At most he would have claim to a certain amount of IP that became
what Facebook currently is. So he may have partial ownership of a small amount
of Facebook.

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.

------
tbrownaw
I can't read that, I just get a gray box (and trying on Windows gives me a
little red 'x' where the corner of the box was).

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?

------
AlekseyKorzun
Mark was born in May 14, 1984, contract was signed in April xx, 2003.

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:

<http://en.wikipedia.org/wiki/Age_of_majority>

~~~
techsupporter
Well, he'd have been over 18 at that point (18 years, 11 months, since the
contract signature date is 23 Apr 2003), but you're right, he was under the
age of majority in the State of New York.

------
gamble
Assuming it's as valid contract, can the fact that it was apparently unknown
until now count against it? It seems fairly obvious that subsequent investors
would have bought out this guy at a much earlier stage if they'd known that
there was someone with such a significant share.

~~~
gte910h
Yes, there is something called a statute of limitations which may limit this.

------
bvi
I'm no lawyer, but the contract says "The agreed upon completion for the
expanded project with working title "The Face Book" shall be _Janruary_ 1,
2004..."

I would imagine typos could affect a contract - would that be the case here?

~~~
gojomo
Not so long as intent is clear. It's not computer code.

------
atomical
If this is legit it's quite damning for Zuckerberg's equity position.

~~~
tomjen3
Zuckerbergs? If he gets 80%, it is going to trash the other investors too.

------
startuprules
The majority sentiment in this discussion seems to be favoring Zuckerberg. I
am not sure why hackers, with the usually higher integrity and honor than
most, will defend this scumbag who seems to defraud not one, two, but three
different parties, and laughs with his buddy on IM about his ability to steal
people's information.

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.

~~~
jonknee
It's probably because they think his [as personally told] story could/will
happen to them. A hacker in a dorm room turns out to ignite the planet and
become a [paper] billionaire nearly overnight. It's a great story and would be
inspiring if true, but like many great stories it's full of shit. He
apparently screwed over nearly everyone he came in contact with to get on top.

~~~
joe_the_user
The justice question here is interesting.

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.

~~~
jonknee
As far as justice goes, I don't have any sympathy for someone who continually
stole other people's efforts and took all the money/glory/power. I doubt he'll
lose it all, but I wouldn't consider that unfair.

Regardless of what happens, it should prove interesting.

------
memoryfault
Consequences...will never be the same.

------
kylelibra
Other than the spot where someone has written in something about a "web
designer" this looks like the most general contract I've ever seen. This could
be from anything. I would find it hard to believe that some judge is going to
give a guy billions of dollars over this.

~~~
houseabsolute
It says "The Face Book" and describes the website. What more specificity do
you want?

~~~
kylelibra
Apparently I'm blind.

