Summary:
A lawsuit filed by Divya Narendra, Cameron Winklevoss, and Tyler Winklevoss, founders of the social network ConnectU in September 2004 alleged that Facebook CEO Mark Zuckerberg had broken an oral contract to build the social-networking site, copied the idea, and used the source code they had provided to create Facebook.
Allegations:
- In 2004, ConnectU accused its former contractor Mark Zuckerberg of stealing ideas and code from it and launching his own college-focused social network, Facebook. After a series of lawsuits ConnectU settled for $20 million in cash and 1,253,326 in common stock.
- In another lawsuit filed by ConnectU in 2008, attempts were made to rescind the earlier settlement on the claim that Facebook had overstated the value of the stock. ConnectU argued that at the time of the settlement Facebook had represented itself being worth $15 billion. However, in a subsequent internal valuation the company was estimated to be valued at $3.75 billion instead.
Defence:
- Facebook's lawyers denied ConnectU's claims that the code for Facebook was stolen from them by Zuckerberg. In court documents, the lawyers said that ConnectU's "broad brush allegations" are unsupported by evidence.
- On April 12, 2011, a three-judge panel of a federal appeals court in San Francisco ruled that the Winklevoss brothers could not back out of a settlement they signed with Facebook in 2008 in response to the allegation of Facebook overstating its stock at the time of settlement.