PALO ALTO, CA (AP)- A lawfirm is claiming Palo Alto-based Facebook Inc. paid $65 million to settle a suit accusing Facebook founder Mark Zuckerberg of stealing the concept for his social network.
The lawfirm that represented ConnectU, a smaller social network, included the settlement amount Facebook purportedly paid ConnectU’s founders in a newsletter.
The settlement was supposed to be confidential. Attorney Peter Calamari of Quinn Emanuel Urquhart Oliver & Hedges told the Los Angeles Times the information was included by public relations employees and didn’t get caught before it was released.
He says the firm had a policy not to discuss the case.
The news was first broken by The Recorder, a legal publication.
Facebook runs the Internet’s largest social network.
In October 2007, it struck a deal with Redmond, Wash.-based Microsoft. As part of a broader advertising partnership with Microsoft, Facebook agreed to sell a 1.6 percent stake to the software maker for $240 million.
The Microsoft investment suggested Facebook’s stock was worth $35.90 per share — a figure used in the settlement of a lawsuit accusing the company founder, Mark Zuckerberg, of stealing the idea for his online hangout from three former classmates who started another social network called ConnectU.
Zuckerberg’s former classmates — Divya Narendra and twins Tyler and Cameron Winklevoss — balked at settling the case last March after learning Facebook determined its common stock was worth about one-fourth of the value derived from Microsoft’s investment.
Narendra and the Winklevoss brothers were speakers at TechJournal South’s first Internet Summit in Chapel Hill NOv. 2008 (see: http://www.internetsummitevent.com/)
Under the settlement, Facebook agreed to pay ConnectU $20 million in cash and 1,253,326 shares of common stock. The stock was worth $45 million, based on the Microsoft valuation, but only $11 million under Facebook’s own appraisal. It’s probably worth less now.
That means ConnectU received anywhere from $31 million and $65 million for settling the suit, depending on which stock valuation is used.
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