The lawsuit accused him of copyright infringement, fraud and stealing trade secrets. Zuckerberg has denied the claims. ConnectU's founders, twins Cameron and Tyler Winklevoss and Divya Narendra, said they asked Zuckerberg for help in programming their site in 2003.

But "a person briefed on the status" of the lawsuit told The New York Times that Facebook was finalising a settlement with the founders and all motions to dismiss the case, as well as the various counter-claims, were expected to be filed "within weeks". No terms of the settlement were disclosed. The timing of the settlement is curious because, last week, a US appeals court ruled that Facebook must defend itself against the ConnectU lawsuit after it filed a motion to dismiss the case.

The drawn-out legal battles with ConnectU have already become a public relations disaster for Zuckerberg and Facebook might now be seeking to put the issue to bed. Court documents including Zuckerberg's Harvard application and personal web diary, unearthed during the discovery process and published in Harvard alumni magazine 02138 last year, portrayed him as arrogant and willing to do anything to reach the top.

Facebook is also rumoured to be gearing up for an initial public offering on the stockmarket, which could be damaged by any lawsuits looming over the company. In their case, the ConnectU founders alleged Zuckerberg deliberately stalled development of the site so he could launch Facebook six months earlier, stealing their idea, code and business plan. "It's sort of a land grab," Tyler Winklevoss was quoted at the time by Britain's The Observer as saying.

"You feel robbed. The kids down the hall are using it, and you're thinking, 'That's supposed to be us.' We're not there because one greedy kid cut us out." The ConnectU founders filed an almost identical suit against Facebook in 2004, but it was dismissed on a technicality.

In 2005, Facebook filed a counter-suit alleging ConnectU hacked into Facebook the previous year to obtain email addresses it could use to entice Facebook users to join ConnectU. The judge hearing the case did not make a decision on that claim. ConnectU's case against Facebook was resuscitated last year and nearly dismissed again after a judge told the Winklevoss twins to find concrete proof that Zuckerberg stole their idea. "Dorm room chit-chat does not make a contract," the judge said.

Like Facebook, ConnectU was launched as a networking tool for college students, but while the former - originally known as Thefacebook.com - went on to expand into all walks of life, ConnectU has languished with fewer than 100,000 users. Further, ConnectU's founders have reportedly moved on to other ventures, leading some in the industry to question the timing of the latest lawsuit.

Facebook has more than 69 million active users. A small investment by Microsoft last year valued the company at $US15 billion.