A settlement Facebook Inc. agreed with Tyler and Cameron Winklevoss for a package of cash and stock worth about $65 million two years ago, but they have sued to upend the deal, they charge the deception cost them millions and now want more money.
In a courtroom in San Francisco, lawyers for the twins Tyler and Cameron Winklevoss and Mr Divya Narendra asked the Ninth Circuit Court of Appeals to allow them to re-open a $65m settlement forged in 2008 after they sued the company.
Jerome Falk, a partner at Howard Rice Nemerovski Canady Falk & Rabkin in San Francisco representing the Winklevosses and their partner, Divya Narendra, said his argument is also based on claims the hand-written, two-page term sheet for the settlement agreement was incomplete and unenforceable.
“The lawyers for both sides made a mistake,” Falk said in an interview before today’s hearing. “The mistake was entering into a transaction with business issues that needed to be addressed and weren’t. They ended up with an agreement that’s vulnerable to the attack we’re making on it.”
Falk said the 2008 settlement is now worth $100 million more than its original amount after Goldman Sachs Group Inc. invested $450 million in the social networking site, boosting the company’s valuation to $50 billion.
The twins say Zuckerberg stole their idea and turned it into Facebook. Zuckerberg denies any betrayal. ConnectU was swallowed up by Facebook in the 2008 settlement deal. Zuckerberg, a second year student at the time, took their code and their idea and launched Facebook in February 2004 instead of holding up his end of the deal, according to the brothers.
“The ConnectU founders struck a deal that made them very, very rich and is making them richer by the day,” Rosenkranz said, referring to the fact the stock part of the deal may be worth more than $100 million for the twins with Facebook’s continued explosion. “At some point, it’s time to move on.”
The brothers are gambling the settlement, which was supposed to be confidential, on a federal court appeal that contends they were tricked a second time because Facebook internally valued the stock at $9.
Members of a three-judge panel bored holes in the argument pitched by Jerome Falk, the attorney who spoke for the Winklevoss twins during a hearing in the Ninth Circuit Court of Appeals in San Francisco.