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April 11, 2011

Court disallows Winklevoss brothers to re-open case against Facebook

Says litigation over original idea behind social networking site must end now

By CBR Staff Writer

A federal court has ruled in favour of Facebook founder Mark Zuckerberg by denying twin brothers Tyler and Cameron Winklevoss to re-open a $65m (£42m) legal settlement signed in 2008 with the company.

The twin brothers have accused Zuckerberg of stealing their idea for Facebook. They say that they had hired Zuckerberg to code their ConnectU site in 2003 after which he stole the idea and founded Facebook.

In 2008, Facebook agreed to a settlement with the brothers but did not admit to their claims that Zuckerberg had stolen their idea. In the deal, the brothers received $20m in cash and $45m worth of stock valued at $36 per share in the deal.

The settlement is now worth more than $160m. In their fresh application, the brothers had alleged that they were misled about Facebook’s value when they agreed to the 2008 settlement.

However, the court ruled that Winklevoss brothers cannot back out of the settlement.

Three Ninth Circuit Court of Appeals judges said in the ruling, "The Winklevosses are not the first parties bested by a competitor who then seek to gain through litigation what they were unable to achieve in the marketplace."

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The court said the litigation must stop now and there is no reason to re-open the case.

"At some point, litigation must come to an end," chief justice Alex Kozinksi said, "That point has now been reached."

"For whatever reason, they now want to back out… Like the district court, we see no basis for allowing them to do so," the judges said.

The lawyer representing the Winklevosses brothers Jerome Falk said they would file for a rehearing within the next two weeks.

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