The legal battle against Facebook founder Mark Zuckerberg led by the Winklevoss twins, who attended Harvard University with the social network’s chief and claim he stole their idea, has been dealt a blow with the Ninth Circuit Court of Appeals denying another hearing.
But the twins – Cameron and Tyler – aren’t giving up yet, and have signaled their intentions to continue with yet another appeal, this time in the Supreme Court.
The legal war between both parties has been brought into the mainstream as a result of its depiction in the blockbuster film The Social Network. It reaches as far back before the site even began, with the Winklevoss twins arguing Zuckerberg agreed to help them build their own site, ConnectU, and then stole the idea to create Facebook.
The latest development sees the court of appeals deny the twins the right to challenge an April ruling which said they could not reopen a settlement finalised between the pair and Zuckerberg in 2008.
The court has also stated that at some point, “litigation must come to an end”.
Such an appeal would have seen the issue heard by 11 judges, rather than the three-judge panel who released the April ruling.
The Winklevoss twins argue the settlement, which was worth about $US65 million, was actually based on fraud. They believe it was based on a faulty valuation of $US3.5 billion, rather than what they believe to be a more accurate valuation of $US15 billion.
Facebook has argued the twins are experiencing a type of remorse following their settlement, as Facebook’s valuation has skyrocketed since then, and the latest ruling seems to hold that belief – essentially telling both of them to let it go.
“Like the district court, we see no reason for allowing them to [appeal]. At some point, litigation must come to an end. That point has now been reached.”
But the Winklevoss twins believe their claim is justified and have said they will take their case all the way to the Supreme Court.
“The law firm of Howard Rice announced that its clients, Cameron and Tyler Winklevoss and Divya Narendra, intend to file a Petition for Certiorari with the United States Supreme Court in the ongoing dispute with Facebook and Mark Zuckerberg,” it said in a statement yesterday.
Lead appellate attorney Jerome Falk said in a statement the decision to deny an appeal actually creates a conflict with the decisions of Federal courts on other issues.
“Settlements should be based on honest dealing,” he said, according to the Wall Street Journal, “and courts have wisely refused to enforce a settlement obtained by fraudulent means.”
“The Court’s decision shut the courthouse door to a solid claim that Facebook obtained this settlement by committing securities fraud. Our Petition to the Supreme Court will ask the high court to decide whether that door should be reopened.”
Falk told Bloomberg earlier this year the valuation of the settlement could be up to $US100 million higher after Goldman Sachs invested half a billion dollars in Facebook.
However, the new appeal is unlikely to ever occur. The Supreme Court accepts only a minority of appeals, many of which are concerned with constitutional matters, and the right to an appeal has now been denied twice.
But if the appeal does go ahead, it could become a costly exercise for the company, especially as it prepares for an eventual IPO.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
