“The Social Network” Update

Ken AshfordSocial Media & NetworkingLeave a Comment

If you saw the movie "The Social Network" — also known informally as "The Facebook Movie" — you'll know that the world's most popular thing evah has been the subject of many lawsuits since its inception in 2003.

And the end of the movie, you are left with the impression that the lawsuits were over — i.e., that Eduardo Saverin received an undisclosed sum and got his name back on the banner as the co-creator of Facebook.

Then there were the Winklevoss twins (aka the "Winklevi") and Divya Narendra got their $65 million in settlement. They claimed to have created the idea and code for something called ConnectU, which was (in their mind) Facebook-like, and that Facebook founder Zuckerberg had stolen the idea and code.

The litigation never went particularly well for the Winklevosses.

In 2007, Massachusetts Judge Douglas P. Woodlock called their allegations "tissue thin." Referring to the  agreement that Mark had allegedly breached, Woodlock also wrote, "Dorm room chit-chat does not make a contract." A year later, the end finally seemed in sight: a judge ruled against Facebook's move to dismiss the case. Shortly thereafter, the parties settled for $65 million.

And that's basically what you get from the movie… roll credits.

Thesocialnetwork But no, my friends, the lawsuits continue.

You see, the $65 million settlement with the Winklevi was part cash, part securities.  $45 million in securities, to be precise.

The Winklevi later contended that the $45 million in Facebook stock was overvalued, and what they really were given as part of the settlement was only $11 million in securities.  So they're still suing Facebook.  AND they suing their original lawyer for malpractice, alleging that he failed to obtain recent valuations of Facebook’s common stock before negotiating the settlement.  And their original lawyer is suing them back, because he wants to get paid.

Anyway, this morning a court ruled that the Winklevi (who are still rowing by the way) still owe their former lawyer $13 million, his contingency fee for getting the $65 settlement.  And they have to pay up.