A New York man has shown up out of the blue, suddenly claiming to own 84% of massive social network service Facebook. If you believe that one, I've got a really nice suspension bridge for sale.
But that doesn't mean that Paul Ceglia's lawsuit will leave him empty-handed. The last time Facebook faced echoes from the early days, the judge called it "dorm-room chitchat" and Mark Zuckerberg's old Harvard buddies settled for a $65 million paycheck. Ceglia has a signed contract to show, potentially giving him a legal leg to stand on.
Ceglia could probably use some cash to cover up the damage from a lawsuit brought against him last year, over alleged nondelivery of $200,000 worth of wood pellets. The acres and acres of property he owns across New York and Nova Scotia will keep him off the streets, at least.
Facebook will fight this lawsuit tooth and nail, and it'll probably take years to get to the bottom of this story. If Ceglia's contract holds up, Zuckerberg's business deal with his purported web developer will be known as the most regretted signature since Springsteen signed with Mike Appel.
Seemingly frivolous lawsuits about business ideas and long-forgotten contracts happen all the time, and some of them even have some merit. For example, a man named Errol Hula says that he came up with the concept of the Hulu video streaming service, and he's currently in arbitration with News Corp (NYSE: NWS ) , General Electric's (NYSE: GE ) NBC Universal, and the other Hulu backers. My guess is that Mr. Hula lands a nice payout there.
And even when there is a contract available, legalese is far from plain English -- Novell (Nasdaq: NOVL ) and the big blue IBM (NYSE: IBM ) machine have been fighting contract claims from SCO Group for more than seven years, over a document that was already eight years old when they started.
Facebook will be all right, and might even make it to the public markets one of these days. At least the company is getting this suit out of the way before it had a chance to hurt individual investors like you and me.