Leaked docs rehash Winklevoss-Facebook drama

Cameron and Tyler Winklevoss, who have alleged for years that Mark Zuckerberg stole their idea for a social-networking site, are still claiming Facebook misled them about its valuation when they received a multimillion-dollar settlement in 2008.

Caroline McCarthy Former Staff writer, CNET News
Caroline McCarthy, a CNET News staff writer, is a downtown Manhattanite happily addicted to social-media tools and restaurant blogs. Her pre-CNET resume includes interning at an IT security firm and brewing cappuccinos.
Caroline McCarthy
3 min read

Previously sealed court documents leaked to gossip site Radar Online reveal that Cameron and Tyler Winklevoss, the identical twins who became famous through their portrayal in the film "The Social Network," are continuing their legal action against Facebook founder Mark Zuckerberg and that Facebook unsurprisingly continues to denounce the claims.

To clarify: This isn't actually a new lawsuit, as a handful of media outlets reported yesterday following a report in the Daily Mail about the Winklevosses suing Facebook again. The U.K. outlet subsequently took down its story.

The partially redacted documents, which surfaced on Radar Online on Tuesday, are dated August 10 and come in the form of a brief filed by Facebook's legal team in response to the ConnectU claims. The twin Harvard graduates, who have for years alleged that Zuckerberg stole their idea for Facebook after they had hired him to code a social-networking site called Harvard Connection (later ConnectU) for them in late 2003, now allege security fraud against Zuckerberg and Facebook. They claim that Facebook was not open about its actual valuation at the time of the original ConnectU versus Facebook lawsuit's settlement in 2008, and that as a result the ConnectU plaintiffs say they're actually entitled to more than the $65 million in cash and Facebook stock that they were awarded.

The document that surfaced is part of ConnectU's ongoing appeal regarding the multimillion-dollar settlement it received from Facebook. The Winklevosses' dissatisfaction has been public for nearly three years now, dating back to the revelation that Facebook valued itself at around $3.7 billion at the time of the settlement and the Winklevosses' subsequent claim that they were misled into thinking it was more than that.

"They acknowledge that Facebook never made any representation as to the value of its shares. Rather, they admit that they calculated the value themselves, based upon a truthful press release from several months earlier. Their fraud claim is based on omission: They fault Facebook for not volunteering a more recent--and, they claim, lower--valuation of different Facebook stock," the court document filed by Facebook in August reads. "They insist that their sworn enemy had some special duty to open its books and volunteer any information that bears on the value of this closely held company."

The surfacing of the document this week makes the whole thing even more high profile, given that Zuckerberg and both Winklevoss twins all appeared in a "60 Minutes" segment about Facebook on Sunday night, one in which one of the twins angrily claimed that Zuckerberg "premeditatively sandbagged us because he knew getting there first was everything" and in which Zuckerberg said he has "probably spent less than two weeks of my time worried about this lawsuit at all."

The film "The Social Network," which was released this fall to widespread critical acclaim, puts the Winklevoss dispute front and center in Facebook's early history. Facebook has denounced the film's subject matter as inaccurate.

Facebook clarified in a statement that the leaked documents don't indicate anything new, and that indications in news outlets like the U.K.'s Daily Mail about a new lawsuit are actually in reference to ongoing litigation.

"There is no new litigation between Facebook and the Winklevosses," a statement from Facebook today explained. "The only recent litigation activity is when the Winklevosses recently lost their malpractice action against their former law firm, Quinn Emmanuel. The filings referred to in the Daily Mail and other articles are simply the filings by Facebook and the Winklevosses in the Winklevosses' now two-year-old, thus far unsuccessful, attempt to undo their 2008 agreement to settle the parties' dispute."

Correction 8:56 a.m. PT: The headline and story were modified to reflect that the leaked document is not part of a new lawsuit.