One thing that’s nice in these volatile times is that the Winklevoss identical twins–aka the Olympic rowing hunks whom Facebook founder Mark Zuckerberg seems to have repeatedly dunked since college–can always be relied upon to create nonstop entertainment for those riveted to their increasingly kooky lawsuit against the hot social-networking site.

(Tyler Winklevoss is pictured here and Cameron Winklevoss is below.)

This week, the latest news came from a bizarre cut-and-paste technique that allowed the Associated Press to get redacted financial details of the settlement related to a lawsuit between Facebook and the Winklevosses, in which they alleged that Zuckerberg stole the idea for Facebook from them.

The method of how AP got to the numbers–getting to the “blacked-out portions by copying from an electronic version of the document and pasting the results into another document”–was perhaps the most interesting piece of news in the hubbub.

That’s because the $3.7 billion valuation for Facebook uncovered Harry Potter-style in the court papers–although treated as new news by the blogosphere–was actually old news from a while back.

For those not paying attention, the legal document revealed that Facebook agreed to pay the Winklevoss-founded social site ConnectU $20 million in cash and 1,253,326 shares of common stock.

The worth of those shares depends on whether you are using Facebook’s “own appraisal” to set the value of the start-up at $3.7 billion or the fictional-from-the-get-go $15 billion from when Microsoft (MSFT) forked over $240 million for preferred shares in Facebook in late 2007.

(If you’re bored, you can play investigative reporter on the docs here too!)

In any case, it’s only the legal hijinks–either via rank incompetency or, more likely, creative leaking–that I want to know more about, especially since heretofore confidential information seems to keep seeping out of this case like some hole-plagued rowing shell.

Besides the invisible ink trick, there was also the “accidental” leak earlier this week by the law firm that once represented ConnectU against Facebook about how well it had scored for the Winklevosses.

In a marketing newsletter, Quinn Emanuel Urquhart Oliver & Hedges bragged it had earned them the higher $65 million figure, based on the Microsoft valuation, rather than the lower Facebook one.

ConnectU fired Quinn Emanuel over the settlement–likely because the lower figure was the right one–and, presto, the new information suddenly emerges.

And last year, Zuckerberg was subjected to widespread ridicule after the Boston-based magazine 01238 got hold of all sorts of court-sealed goodies about his bad behavior while a student at Harvard University, where he created Facebook.

It just gets curiouser and curiouser.

Of course, the documents that still have not gotten leaked are the alleged “smoking gun” that shows Zuckerberg to be guilty and the Winklevii redeemed. While many on the twins’ side have persistently insinuated they exist, such proof has not surfaced as yet.

That’s why, until then, this whole legal circus remains a ship of fools.

Now, the stake Microsoft (MSFT) took in Facebook was in preferred stock, which is inherently more valuable than the common stock on which Facebook’s appraisal was based. That said, it’s doubtful that Microsoft’s shares are loaded up with enough special rights to account for the vast discrepancy between $35.90 per share and $8.88 per share. Remember, Google (GOOG) once purchased five percent of AOL for $1 billion at a company valuation of $20 billion, only to write down $726 million of that investment a few years later.

One last point worth noting here, about the terms of Facebook’s settlement with ConnectU. It was reported earlier this week that the social network had paid ConnectU $65 million to settle the case against it. According to the Associated Press, however, Facebook agreed to pay ConnectU $20 million in cash and 1,253,326 shares of common stock. At the $35.90 per share “Microsoft” valuation, that stock would be worth $45 million. But at the “Facebook” valuation, it’s worth just $11 million. So in Facebook’s view, the company agreed to a $31 million settlement, not a $65 million one.

Frankly, I’m kind of appalled that they’re threatening me after the work I’ve done for them free of charge, but after dealing with a bunch of other groups with deep pockets and good legal connections including companies like Microsoft, I can’t say I’m surprised. I try to shrug it off as a minor annoyance that whenever I do something successful, every capitalist out there wants a piece of the action.”

–Facebook CEO Mark Zuckerberg, February 2004

The inane dispute over the provenance of Facebook apparently ended in a multimillion dollar resolution. Facebook has reportedly paid the founders of ConnectU $65 million to settle a lawsuit that accused founder Mark Zuckerberg of lifting the social network’s source code and business plan when he worked for it as a programmer. A nice little financial windfall for the founders of ConnectU–brothers Cameron and Tyler Winklevoss and their colleague, Divya Narendra. Facebook certainly has money to pay to make the suit go away and a very good reason to pay it: It would be poor form to leave its quaint little creation myth in dispute.

News of the “confidential agreement” was apparently broken by ConnectU’s legal counsel, Quinn Emanuel Urquhart Oliver & Hedges, which inadvertently disclosed it in a promotion for its legal services.

“Lawyers in the heavyweight fight had expended great effort to keep the settlement secret–even going as far as persuading a judge to clear the courtroom of reporters on one occasion,” The Recorder reports. “But ConnectU’s former lawyers from Quinn Emanuel Urquhart Oliver & Hedges published the settlement amount in a firm advertisement trumpeting the firm’s prowess. ‘WON $65 million settlement against Facebook’ appears, along with dozens of other Quinn outcomes from last year, in the firm’s January business litigation newsletter.”

All parties involved declined comment on the “confidential settlement.”

BoomTown simply cannot resist the irresistible urge to compare the gripping quest for gold by U.S. Olympic team rowers (and, as you can see here, left to right, identical twins) Tyler and Cameron Winklevoss with their more lackluster effort to grab a piece of Facebook via a lawsuit.

In an unlikely upset in the semifinal of the men’s pairs, the hunky brothers placed second and will go on to the finals on Saturday.

Apparently, the Winklevosses actually have some magical come-from-behind in them.

Although they were sucking wind in the first part of the race yesterday, they surged in the last 500 meters of the course to the fastest time of 1:34.34, which vaulted them from fifth place of six boats.

Their overall time was 6:36:65.

Thus, Facebook Founder and CEO Mark Zuckerberg might want to be a tiny bit scared. After all, the Winklevosses have lagged behind badly so far in their fight with him over whether the ideas and programming of their ConnectU service were stolen at Harvard University in the creation of Facebook.

At this point, the Winklevosses have essentially lost their case, but they are still arguing with Facebook over the confusing valuation of the hot social- networking site (much as Facebook employees are!).

While I doubt they can pull off a Hail Mary with regard to Facebook, let’s all keep our fingers crossed that they can grab a pair of well-deserved medals this Saturday.

Also, here is a link to an pre-Olympic video interview with Cameron Winklevoss and one with Tyler Winklevoss on row2k.com (they are unembeddable…grrrr).

A few months ago BoomTown was in Berlin and visited a number of Internet companies there, including studiVZ, which I called “the Facebook of Germany” in the video posted below of my visit there.

Ooops!

As it turns out, that is apparently the illegal way to describe it, at least according to Facebook itself, which sued the German company in a California court last Friday, accusing it of making a “knock-off” of the popular social networking site.

That includes having a German version of Facebook’s popular Wall and other similar features. At least studiVZ is red, while Facebook is blue!

The name studiVZ is an abbreviation of the German word for students’ directory. Its tagline is “Bist Du schon drin?,” which translates to “Are you already there?”

Facebook has been trying to break into the German market for months now, as part of an aggressive international expansion.

But its efforts have been dwarfed by studiVZ, which was founded in 2005 and has been expanding throughout Europe. studiVZ now has 10 million users, mostly in German-speaking countries.

It also has a site for high-school students called schülerVZ and another for nonstudents called meinVZ.

Thus, a lawsuit from Facebook, which just settled a lawsuit with another startup called ConnectU (Winklevoss!) that accused Founder and CEO Mark Zuckerberg of stealing its original idea for a social networking site!

This just drips with irony, doesn’t it?

In any case, in its lawsuit, Facebook said it is “seeking to end studiVZ’s illegal activity to ensure that users are not confused and that Facebook’s reputation remains unharmed.”

Oh, German users aren’t confused–they just seem to like studiVZ better.

So much so that the company was bought last year by an investor, the large German publisher Verlagsgruppe Georg von Holtzbrinck, for $112 million.

In response to the Facebook lawsuit, studiVZ said it had not yet been served with the California lawsuit and could not comment in detail.

Except it did manage to issue a statement that the “claims are without merit.”

Apparently, studiVZ is also trying to block the suit in German court too, creating what amounts to an international SuperPoking incident (called a gruscheln on studiVZ).

“Now that Facebook, despite trying hard, has not been successful in the German market, the company seeks to obstruct studiVZ through court action,” said Marcus Riecke, CEO of studiVZ. “Their strategy appears to be: If you can’t beat them, sue them.”

Added Riecke: “There are numerous social networks. Facebook was not the first and certainly isn’t the only one. By attempting to harm studiVZ through a meritless California lawsuit, Facebook is arrogantly laying claim to an international monopoly over social networking sites that the facts show it does not deserve.”

In the video below, I talk to Dennis Bemmann, one of two founders of studiVZ, as well Michael Brehm. They run the company together in a troika with Riecke.

Notice how they try not to cringe when I call their site the Facebook of Germany, and also when Bemmann takes pains at the end to say that there are a lot of things alike all over the Web.

Like studiVZ and Facebook, say?

Here’s the video (sorry about calling it studio so much and not just studi–but my German stinks!):

They lost.

In court, I mean, not in rowing!

But I am sad to say BoomTown is deeply uninterested in the long-running legal struggle between Facebook Founder and CEO Mark Zuckerberg and the hot social-networking site and the group affiliated with ConnectU–heretofore referred to by BoomTown as NotFacebook.

Namely the Winklevoss brothers, Cameron and Tyler (and also another guy, not a Winklevoss), who are world-class rowers.

Without going into the gory details, they settled a lawsuit in February that centered on how Facebook was founded and whether or not Zuckerberg stole code to create it while an undergrad at Harvard University.

And then the Winklevosses claimed that that settlement in the endless legal battle should be voided because of fraud and reopened.

The ConnectU side claimed that it had found some “smoking” gun instant messages that proved their case.

Whatever.

The federal judge in San Jose decided to let Facebook enforce the settlement anyway (but, because there are lawyers involved, there will probably be yet another bite at the apple).

In any case, BoomTown fully enjoyed the take-no-prisoners PR stylings of Facebook, now under uber-PR guru Elliot Schrage and, thus, we render the statement about the win here in its entirety:

We are happy that Judge Ware enforced the agreement settling our dispute with the ConnectU founders. ConnectU’s founders were represented by six lawyers and a professor at Wharton Business School when they signed the Settlement Agreement. The ConnectU founders understood the deal they made, and we are gratified that the Court rejected their false allegations of fraud. Their challenge was simply a case of ‘buyers remorse,’ as described by the Boston Court earlier this month.

We were disappointed that we had to litigate the settlement, as we believed we were caught in the middle of a fee dispute between ConnectU’s founders and its former counsel. Nevertheless, we can now consider this chapter closed and wish the Winklevoss brothers the best of luck in their future endeavors.”

As in, don’t let the door hit your Winklevii on your way out!

Because Mark Zuckerberg is barely in his mid-20s, his résumé is a bit thinner than others here. Well, except for his first job as founder and CEO of Facebook, perhaps the most explosively popular social-networking company ever and the most high-profile Web 2.0 start-up. Mr. Zuckerberg created Facebook in 2004, while still an undergraduate at Harvard University, where he studied computer science. He brought the company to Silicon Valley before he had a chance to graduate from college, but managed to get a $15 billion valuation for the company anyway.

Sheryl Sandberg was Facebook’s first high-profile hire, coming to the social-networking site from Google earlier this year. At Facebook, she manages a wide swath of the company’s business operations, including sales, marketing, business development, human resources, public policy, privacy and communications. Ms. Sandberg was vice president of global online sales and operations at Google, where she built and managed the online sales channels for advertising and publishing and operations for consumer products globally. She was also instrumental in launching Google’s philanthropic arm. Ms. Sandberg was previously chief of staff for the United States Treasury Department under President Bill Clinton. She was also a management consultant with McKinsey & Company and an economist with the World Bank. She holds an MBA from the Harvard Business School and was also an undergraduate at Harvard.

• Zuckerberg and Sandberg take the stage bearing gifts. Sandberg notes that Barry Diller described Facebook as the Princess Phone, so they hand Kara one of the devices. Sandberg says she hopes the gift will convince Kara to stop writing about the company so much. Kara: I won’t ever stop until you’re either the biggest thing around, or you’re dead.
• Kara to Zuckerberg: Define Facebook. Facebook, he says, is about helping people to share information and share themselves. It’s also about providing people complete control over their information and privacy (whawhaWHA?). [For a bit of background on that statement , check out the following Digital Daily posts:]
  • Fiascobook
  • Fiascobook, Redux
  • Epicurious Has Added a Potential Privacy Violation to Your Facebook Profile!
• Who did you look to for inspiration, Kara asks, when you first started? (ConnectU.com? No such luck.) AOL, apparently.

  

• Kara asks what it was like to come to Silicon Valley and get the sort of attention Facebook was given so quickly. Zuckerberg says Facebook didn’t become a phenom as quickly as many think. Originally, he’d moved out to California just for the summer. And he wasn’t really thinking about starting a company. “At the end of that summer, a bunch of us ended up staying in California …” And the rest, presumably, is history.

• Kara: Were you lonely at Harvard? Did you like college? Zuckerberg says he did, adds that it was funny listening to Bill Gates’s reminiscences about Harvard yesterday evening. (Cut from the same cloth, apparently, Gates and Zuck). Zuckerberg says he skipped class quite a bit as well. He was too busy working on Facebook. As the final in a course that he’d skipped pretty much in its entirety approached, a very unprepared Zuckerberg created a study tool Web site and encouraged his classmates to contribute to it. They did and he passed the course.
• Kara asks Sandberg about her early career. She recalls realizing tech’s importance while working for Larry Summers in the U.S. Treasury Department. She subsequently moved out to California, met Larry Page and Sergey Brin and took a job at Google. She says she was drawn to Google because of its concern for the user.
• Kara turns back to Zuckerberg. Tell me why you want to be CEO of Facebook and why you’re the guy for the job. Zuckerberg recites some PR bullet points (Facebook is about helping people to share information and share themselves ….). Kara, attempting to force Zuckerberg to do just that, takes a different tack: What did the Beacon fiasco teach you about leadership? Zuckerberg says that Facebook learned that if you give people control over their information, they’re more willing to share it. He concedes that Beacon was a big mistake. Kara asks if Beacon really was a mistake conceptually. Its execution was obviously a disaster, she notes, but its concept was interesting. Zuckerberg says there were other issues with its UI. (Privacy protections too, if you ask me.)

• Turning to Sandberg, Kara asks why she left Google (GOOG) to take a job at Facebook. She recites another variation of the same bullet points Zuckerberg offered earlier. Facebook, we are to understand, is about helping people to share information and share themselves. (Huh. Appears that there may be some sort of Facebook hive-mind at work here.)
• Discussing the opening of the Facebook platform now … Zuckerberg says that he felt that building our development platform so that anyone could make the same applications we were making would drastically expand the platform. And it did. He notes that within four days of the platform’s launch, iLike had developed an application that had 1 million users. Left unspoken for the moment: Facebook is about helping people to share information and share themselves. But you know he’s thinking it …
• Noting the generally juvenile nature of Facebook apps, Kara wonders if such applications have to become useful at some point. Zuckerberg answers that utility and usefulness don’t have to be a huge application. There’s a trend toward smaller, useful applications that aren’t Microsoft Word, he says, but still address a need. (Yeah, like Hotties …)

• Sandberg notes the continued popularity of Superpoke. Says that whimsical applications have been the ones that have gained the most traction. Clearly a “Zombies” freak, this Sandberg.
• What about the monetization issue? What about advertising? (Yes, yes, Kara. But what about helping people to share information and themselves? Hmm?) Sandberg addresses the monetization issue by talking about demand fulfillment. She notes that Facebook has an extraordinary amount of information about its users (their “Hottie” valuations, perhaps?) and can work with advertisers to create real user engagement by addressing user demands. She describes a free-cone promotion Facebook held with Ben and Jerry’s that was so successful that it generated some 53 million page views on Ben and Jerry’s Web site and forced the company to give away 250,000 more cones than it had planned. Aha! Not only is Facebook about helping people to share information and themselves, it’s about sharing ice cream as well.
• Kara: What sort of company are you? Zuckerberg: We’re not a media company. We’re a technology company. Kara: OK, what’s a technology company, then? Zuckerberg replies that it’s a company that creates technology. (Tell me again why Facebook is reportedly worth $15 billion?)
• Sandberg also feels Facebook is a technology company. (Looks like we’re all in agreement here about technology companies and how they develop technology, as well as how Facebook is all about helping people to share information and share themselves. Moving on …)
• Kara: So are you interested in selling to Microsoft (MSFT)? If Ballmer approached you right now and offered you $15 billion, what would you say? Zuckerberg replies that selling the company to Microsoft doesn’t really advance the company’s mission. Unlike Facebook, Microsoft, apparently, is not all about helping people to share information and share themselves.
• What’s your view on the Microsoft-Yahoo situation in light of your own relationship with Microsoft? Kara asks. Sandberg says the partnership is working out. Kara pushes her a bit more. No luck. She follows up with a question about Google. Asks if relations between the two companies haven’t been a bit tense lately over all that Open Social business? Zuckerberg disagrees with that characterization and claims to have had dinner with Google founders Brin and Page recently. “They actually came over to my house,” says Zuckerberg (quite the Silicon Valley street cred moment we’re witnessing here). “Page got one of the two chairs and Schmidt wound up on the floor.” You cooked them dinner? asks Kara. Zuckerberg: “I don’t have the proper things in my house to make dinner.” Presumably, he does have the proper things to help people share information and themselves.
• Question from filmmaker Barry Sonnenfeld, who says his daughter gives up all sorts of private information on Facebook. Doesn’t this portend a dreary future for our children that privacy is forfeited so easily? (What the hell’s wrong with you Barry? Don’t you know that Facebook is about helping people to share information and share themselves?) Zuckerberg says that there are privacy checks on the site and that teens and everyone else can take them to ensure their privacy.

• Another question: Tell us three applications that don’t yet exist that you’d like to see. Zuckerberg says he’d like to see applications based around sharing information about sports, politics and religion. (Aren’t there thousands of apps like this already?) “Religion,” says Zuckerberg, “that’s a big thing around the world.” Straight into Bartlett’s Familiar Quotations, that one.
• Question: What are developers doing with all the information they request when you download a third-party application? Sandberg fields this one. She says Facebook has strict policies about the use and transfer of that information, adds that users control how much of that information is disclosed. She also notes that most of these developers are invested enough in the platform that the threat of being kicked off it for the exploitation of user information is an effective deterrent. The community is very effective at policing itself. Facebook, she adds, is about helping people to share information and share themselves and protecting their privacy.
• Ed. note: For those of you just joining us, “Facebook is about helping people to share information and share themselves.”
• Another question: As Facebook users become more connected, how do they manage their connections? Kara points out that once you hit critical mass on the site, your profile page and newsfeed become unwieldy. Zuckerberg says the company is working on tools to address this issue.
• Question from Tim O’Reilly: Facebook’s model is built around categorization and lists. At what point does it need to build on search? And isn’t Facebook falling behind on that front? Zuckerberg says that seems to be a reasonable theory. As the site gets larger it needs to get better at filtering and searching its contents. After all, Facebook is about helping people to share information and share themselves, is it not?

For more coverage, see Barron’s Tech Trader Daily and The Wall Street Journal.

A note about our coverage: This live blog is not an official transcript of the conversation that occurred onstage. Rather, it is a compilation of quotes, paraphrased statements and ad-lib observations expeditiously written and posted to the Web as quickly as we were able. It was not intended as a transcript and should not be interpreted as one.

But a judge in Massachusetts wisely denied an inane request by the Palo Alto, Calif.-based social-networking start-up to take down confidential court documents that 02138 magazine had made available for downloading on its Web site.

The documents were part of a hard-hitting piece called “Poking Facebook” by free-lancer Luke O’Brien, which 02138 recently published, about the origins of Facebook at Harvard University.

“This is a victory not only for 02138, but for the First Amendment as well. We felt we had an important responsibility to report the story and we hope that we were able to promote greater public understanding of the origins of a powerful and influential Web site,” said 02138 President and Founder Bom Kim in a statement. “The judge concluded that the article was an example of ‘core journalism’ and that the original documents on 02138mag.com increased transparency, offering readers unfiltered access to more information on which to evaluate the story.”

Facebook had no comment.

But how could its execs, really, given the appalling nature of their efforts to quash documents that should not have been, especially because they were already loose on the Web?

By way of background, as we reported here Friday, the legal brouhaha started not because, as Facebook maintained, confidential court documents were released, but because some of the those documents–including an application to Harvard University–contained Facebook founder Mark Zuckerberg’s Social Security number, the full name of his girlfriend and the address of his parents’ house in New York.

02138, an independent magazine focused on Harvard alumni like Zuckerberg, put up a series of court documents in a downloadable format here it had obtained from a court in Massachusetts to add to its Facebook story.

The documents were related to another lawsuit being waged against Facebook and Zuckerberg by the founders of another social-networking service at Harvard called ConnectU about whether Zuckerberg–who was supposed to program ConnectU–illegally took ideas from it to create Facebook.

At first, though, editors had inadvertently not redacted that sensitive personal information about Zuckerberg from the documents it posted. It was a sloppy mistake, but they quickly removed those references.

Apparently, that was not good enough for Facebook’s Zuckerberg.

Said Facebook PR head Brandee Barker Friday after the emergency filing to stop 02138 (and who has to have the most thankless job on the Web these days): “We filed the motions to let the court know that its orders were being violated. One reason the court ordered certain documents’ protection was to prevent exactly what has happened: misusing documents and taking documents out of context to sling mud. We want to be clear on what these motions are about. These are not about an article the magazine has written, these are about documents that were protected by a court that have been misused.”

Ironically, the release of Zuckerberg’s personal information comes just as his company is under intense fire for new ad programs it recently introduced, especially one called Beacon, which can track your purchases on some external sites and send the information back to your Facebook profile’s news feed.

While it made some changes in Beacon last week, Facebook has not given users a global opt-out of the controversial marketing system in which the social network is seeking to link behavior and advertising more tightly for supposedly bigger payoffs.

Of course, after more bad publicity, rising user ire and inevitable advertiser pull-out from the program (Coca-Cola has already headed for the hills, according to reports), it’s a good bet that Facebook will be forced into an opt-out-for-all solution.

But, I am guessing given what was to be simple stubbornness on the part of Zuckerberg, another few rounds of devastating publicity for Facebook.

Let’s just say that this is not a good thing for a company that recently got a $15 billion valuation after $300 million of investments by Microsoft and last week, as first reported by BoomTown here, Asian billionaire Li Ka-shing.

There is little question in my mind–and it has to be going through the minds of all Facebook employees and investors–that all this should be considered a major fumble on the part of 20-something CEO Zuckerberg, whose judgment on how to handle both Beacon and in waging the pointless lawsuit against 02138 seems deeply flawed at best.

More on that key issue for Facebook here in BoomTown next week.

So exactly why did Facebook unleash such a massive legal fury on 02138 magazine yesterday over documents the publication posted online?

Because, said sources, those documents–including an application to Harvard University–contained Facebook founder Mark Zuckerberg’s Social Security number, the full name of his girlfriend and the address of his parent’s house in New York.

Now, apparently, the Beacon’s on the other foot.

The independent magazine, which is aimed at Harvard alumni, put up a series of court documents in a downloadable format here it obtained from a court in Massachusetts related to a hard-hitting story it recently published about the origins of Facebook at Harvard, and had inadvertently not redacted that sensitive personal information in all places at first.

It has since removed those references, but many online readers had already downloaded the PDF files.

“It was a regrettable error and we have fixed it,” said Richard Bradley, executive editor of the magazine.

Wrote the magazine’s spokesperson in a statement to BoomTown: “1) It was an oversight and as soon as 02138 was alerted they took it down. 2) The parents’ address is listed in the white pages and they are the only Zuckerbergs in Dobbs Ferry. 02138 nonetheless took it down as a courtesy. 3) This was not brought to 02138’s attention by Facebook.”

Harsh!

Facebook fired back just as hard, via an email from PR head Brandee Barker.

She wrote: “We filed the motions to let the court know that its orders were being violated. One reason the court ordered certain documents’ protection was to prevent exactly what has happened: misusing documents and taking documents out of context to sling mud. We want to be clear on what these motions are about. These are not about an article the magazine has written, these are about documents that were protected by a court that have been misused.

“Mark Zuckerberg and many others built Facebook through their own ingenuity and hard work, and they are focused on building it further. It is unfortunate but not surprising that others falsely claim credit for it after its enormous success.”

The documents Facebook is seeking to squash are confidential and related to another lawsuit being waged against Facebook and Zuckerberg by founders of another social-networking service at Harvard called ConnectU about whether Zuckerberg–who was supposed to program ConnectU–illegally took ideas from it to create Facebook.

The release of such sensitive information about Mark Zuckerberg (pictured here while a student at Harvard) on the Web is, of course, deeply ironic given that Facebook is embroiled in a controversy over advertising practices it has unveiled recently that some think are violations of Facebook users’ privacy.

Yesterday, Facebook announced changes to one of those ad practices–called Beacon, which can track your purchases on some external sites and send the information back to your Facebook profile’s news feed–to try to assuage those critics by giving users more control over the data. There is still, though, no global opt-out of the controversial marketing system in which the social network is seeking to link behavior and advertising more tightly.

At the same time, it also filed emergency legal motions to get 02138 to take down those documents, which also included Zuckerberg’s testimony in a court case over whether he stole the idea for Facebook, a personal online journal and also financial documents from 2005 for Facebook.

In an online blog post to readers, Bradley said: “We believe that we have a legal right to post them online and that you have a legal right to read them. Meantime, spread the word that a company which plans to collect and sell personal information about 50 million people doesn’t want one magazine to do the same about Facebook and its founder Mark Zuckerberg.”

02138 president and founder Bom Kim, who launched the magazine a year ago with Dan Loss and with the backing of Atlantic Media, said Facebook’s legal action against the article and documents illustrate some troubling issues for Facebook related to its young founder.

“I hope this points to the fact that Zuckerberg and those around him are concerned by the questions the documents raise about Zuckerberg’s behavior in the past and in the origins of Facebook,” he said in an interview today.

Indeed, as I pointed out in a post I did earlier this week about the article in 02138: “As the legal battle works its way through the system, mostly related to the question of whether Zuckerberg illegally stole the basic idea for Facebook, the one carry-away from the article is still astonishing–and also a little disturbing: Just how many enemies he has collected at such a young age.”

Magazine sources said Facebook lawyers seemed more concerned about the posting of the online journal written by Zuckerberg, which was–shall we say–a bit juvenile, with references to being drunk and making fun of other students, as well as the Facebook financial documents.

But sources close to Facebook said Zuckerberg was furious about the release of his more personal information, like the Social Security number.

Facebook also argued in its motions that the documents were sealed by the court. 02138′s Bradley said the free-lance reporter, Luke O’Brien, who wrote the article, got them legally from the office of the U.S. Court of Appeals for the First Circuit in Boston.

In a motion hearing, ConnectU disputed Facebook’s allegations and asked U.S. Magistrate Judge Richard Seeborg to dismiss the countersuit. “Facebook makes untrue assertions,” said ConnectU attorney Scott Mosko, presumably in an attempt to frame the suit as a dissembling one, filed in retaliation over ConnectU’s lawsuit, which accuses Facebook founder Mark Zuckerberg of lifting ConnectU’s source code and business plan when he worked for the company as a programmer.

For his part, Zuckerberg has maintained that Facebook’s code was developed independently. And it may well have been. Although perhaps not by Zuckerberg. According to Aaron J. Greenspan, one of Zuckerberg’s Harvard classmates, he (not Zuckerberg) created the college social network that inspired Facebook.

Months before anyone had even heard of Facebook, Greenspan established a similar service that he called houseSYSTEM. Among its features: “Face Book,” an online system for quickly locating other students.

Simple coincidence? Not by a long shot. “Remember the Web site you signed up for at Harvard two days before we met in January 2004 called houseSYSTEM–the one I made with the Universal Face Book that predated your site by four months?” Greenspan wrote in an open letter to Zuckerberg last year. “Well, I’ve relaunched it as CommonRoom, and just like its predecessor, it has all sorts of features that might seem familiar: birthday reminders, an event calendar, RSVPs, how you know someone, photo albums, courses posters. After all, when you saw all of those features in houseSYSTEM three years ago, you called them ‘too useful,’ but I stood by them as valuable. Fortunately, even though I shut down houseSYSTEM, I can still use those same features on Facebook– and I didn’t even have to write any more code!”

It was interesting that the New York Times opted to use the gam shot for its weekend story on what makes a contract dispute–using the comely rower legs of one Tyler Winklevoss, one of two brothers who is suing Facebook founder Mark Zuckerberg for allegedly stealing their business plan and technology for a social-networking service called ConnectU when he worked for them at Harvard as an unpaid programmer.

So far, the Winklevosses have struck out with the judge in the case, who has demanded more evidence than just “dorm-room chitchat”–you know, like contracts, nondisclosure agreements, even a smoking bit of source code–which has not been forthcoming.

Until either the Winklevosses or someone else can prove that Zuckerberg stole the exact code (similar is not good enough, by the way), it just looks like the 23-year-old entrepreneur essentially plagiarized a good idea and ran with it, which is icky, but not illegal.

Icky too is the relentless hype the company continues to garner, this week with Zuckerberg on the cover of Newsweek, in a good explainer article by Steven Levy (although it is a wee bit too interested in the also icky “poke” aspect of the site).

While I don’t begrudge Zuckerberg his time in the sun (OK, I did in this post), all this attention is building expectations that are too much for the service, no matter how fast-growing it is. I don’t have to say PointCast or Friendster or Epinions or AOL or Netscape or, well, I could go on, to make the point.

This is a civil action for breach of contract, misappropriation of trade secrets, breach of fiduciary duty, unjust enrichment, intentional interference with prospective business advantage, breach of duty of good faith and fair dealing, and fraud arising out of Defendant’s… unauthorized use of Plaintiff’s source code and confidential business plans, and usurpation of business opportunity.”

Surely, it’s that last bit that chafes the plaintiffs in the case the most. Because that “business opportunity” is currently valued at anywhere from $2 billion to $6 billion. No wonder they’re demanding Facebook be shut down and its profits be turned over to them. “This lawsuit goes to the core of the assets that Facebook claims to own,” Eric Goldman, director of the High Tech Law Institute at Santa Clara University, told Condé Nast Portfolio. “The ConnectU guys are clearly ticked off, and they seem willing to spend a lot of money to pursue this.”