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Winklevoss twins lose Facebook appeal in Court

published  First Published: 13/04/2011
Article written by: Nigel Brookson

 

Winklevoss twins must accept Facebook deal - 9th U.S. Circuit Court of Appeals says.

Mark Zuckerberg and by default Facebook have won the latest round of legal battles against former Harvard students the Winklevoss twins, who accuse him of stealing their idea for Facebook, but the legal challenges highlighted by the Hollywood film 'Social Networking' are sure to not be over yet.

The Winklevoss twins, along with business partner Divya Narendra, did start a company called 'ConnectU' while they were studying at Harvard University, and claim that Mark Zuckerberg stole their idea for an exclusive social networking site, and set up Facebook.

 

Mark Zuckerberg denies these allegations, and has had to face several legal challenges; not only from the twins.

Cameron and Tyler Winklevoss must accept a cash and stock settlement with Facebook that had been valued at $65 million, the 9th U.S. Circuit Court of Appeals ruled.

The Winklevoss brothers, arguing "on principal" say their settlement with Facebook was unfair because Facebook did not properly disclose its true value during the negotiations.

The 9th U.S. Circuit Court of Appeals Chief Judge Alex Kozinski and unanimous three-judge panel does not agree.

In their ruling they wrote:

"the twins were sophisticated negotiators aided by a team of lawyers, ... At some point, litigation must come to an end, ... That point has now been reached."

Jerome Falk Jr. an attorney for the Winklevoss twins, said his clients would seek a rehearing before a larger, group of 9th Circuit judges.

That larger group can overrule a three-judge panel, although only a fraction of cases undergo such a review. Should the 9th Circuit refuse to rehear the case, the last option; sure to be taken, would be an appeal to the U.S. Supreme Court.

Facebook took in $1.2 billion of revenue in 2010's first nine months, according to documents that Goldman Sachs provided to clients to entice investors in a special fund set up to invest in the giant social networking firm.

Facebook was valued at $50 billion as part of that transaction.

The Winklevoss twins, along with Narendra agreed to a settlement that had been valued at $65 million. But they argue that, based on an internal valuation that Facebook did not reveal, they should have received more Facebook shares as part of the deal.

A lower court had previously granted Facebook's request to enforce the settlement with the Winklevoss twins and Narendra.

"The Winklevosses are not the first parties bested by a competitor who then seek to gain through litigation what they were unable to achieve in the marketplace" Chief Judge Alex Kozinski wrote.

Facebook deputy general counsel Colin Stretch said Facebook appreciated the court's careful consideration of the case and was "pleased" it ruled in their favour.

One thing is for certain, there is more than enough drama happening around Facebook to make a sequel to the movie, or another movie with New York businessman, Paul Ceglia, claiming a contract with Zuckerberg to develop and design a website entitles him to an 84 percent stake in Facebook.

 

 

Related Article: New Faces on Rich List, Facebook Has Acquired FriendFeed, 2009 Year of Facebook & Twitter

 

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