Page last updated at 09:39 GMT, Thursday, 14 August 2008 10:39 UK

End nears in Facebook legal row

Facebook boss Mark Zuckerberg, BBC
Facebook founder Mark Zuckerberg met ConnectU founders at Harvard

Facebook has won approval to acquire rival ConnectU despite an appeal against an agreed settlement.

In 2004 ConnectU's founders sued Facebook claiming creator Mark Zuckerberg took his idea for a social networking site from them.

The lawsuit was settled in early 2008 but ConnectU claims Facebook misrepresented its value during talks.

The judge has told ConnectU to stick to the agreed settlement and transfer its stock to Facebook.

The row over valuation has been caused by Microsoft taking a $240m (128m) stake in Facebook in October 2007 that valued the site, on paper, at $15 billion.

Facebook said that figure should not be used to rate the company's worth as that valuation was specific to Microsoft's preferred stock and the business deal surrounding it. Facebook said its real valuation stood at $3-4bn.

Court papers have shown that as part of the approved settlement, Facebook agreed to give ConnectU's owners an undisclosed amount of money and Facebook stock.

Facebook logo in eye
Facebook was originally started as a site geared towards students

In return ConnectU's principals agreed to turn over to Facebook all the stock they held in ConnectU.

In their appeal ConnectU co-founders Cameron and Tyler Winklevoss along with fellow partner Divya Narendra claimed that implementing the agreement now would let Facebook disrupt the appeals process.

Judge James Ware of the US district court in San Jose, California ruled that before ConnectU's appeal can be heard, the settlement made earlier this year has to go through.

"The longer the court delays in enforcing the settlement between the parties, the more like the value of the consideration subject of the settlement will change," he wrote in his judgement. "Any further delay in enforcing the settlement will create a serious risk of prejudice to Facebook, as well as to ConnectU."

He added: "This means the status quo cannot be preserved with a stay."

He originally rejected ConnectU's claims of fraud in June prompting the appeal which he has pledged to hear.

The ConnectU founders sued fellow Harvard student Mark Zuckerberg in 2004 accusing him of stealing their idea for the company following work he did on a dating site for them in 2003.

Facebook said it would not comment on the case. ConnectU did not return calls for comment.

Meanwhile the Winklevoss brothers are competing for rowing gold in the Beijing Olympics. They came second in their semi-final to win a place in the men's pairs final.

Recent figures by Comscore show Facebook is now the world's biggest and fastest growing social networking site with 132 million unique visitors in June.

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