In a civil lawsuit filed in the Supreme Court of New York's Allegany County last month, Paul Ceglia said he signed a contract with Facebook co-founder Mark Zuckerberg in 2003 to develop and design a website.

The terms of the contract entitled Ceglia to a $1,000 fee and a 50% stake in the product, which eventually was launched as thefacebook.com, according to the lawsuit.

The contract also stipulated that Ceglia “would acquire an additional 1% interest in the business, per day, until the website was completed,” and the suit said that by February 4, 2004, Ceglia's stake in Facebook totaled 84%.

Facebook called the suit completely frivolous. The company said the case has been moved to federal court, where Facebook has asked that Allegany Court Judge Thomas Brown's recent order restricting the transfer of Facebook assets be struck down.

“The order will not affect our ability to do business but we do not believe it is legally supported and we have moved to have it vacated,” said Facebook's Barry Schnitt.

Facebook, which has nearly 500 million users, is the world's No.1 Internet social networking service and ranks among the Web's most popular sites, alongside Google Inc, Yahoo Inc and Microsoft Corp. The privately held Facebook is also one of the most closely-watched Web companies by investors eager for a blockbuster initial public offering.

Ceglia and his attorney could not immediately be reached for comment.

In December 2009, New York Attorney General Andrew Cuomo obtained a temporary restraining order against a wood-pellet fuel company owned by Ceglia and his wife Iasia, of Wellsville, New York, according to a press release.

Cuomo's suit alleged that Allegany Pellets took $200,000 from customers and failed to deliver any products or refunds.

News of Ceglia's suit against Facebook was first reported by the Wellsville Daily website on Monday.

Ceglia's suit contends the contract with Zuckerberg was dated April 2003. Some of the previous accounts of Facebook's history have said that Zuckerberg was at work on other projects during that period and did not come up with the idea for Facebook until later. The Internet domain name for “TheFacebook.com” was registered in January 2004, according to Network Solutions online registry of domain names.

The case is Ceglia vs. Zuckerberg & Facebook, 038798/2010 in the Allegany Supreme Court for New York State. (Reuters)