ConnectU founders Cameron Winklevoss, Tyler Winklevoss and Divya Narendra have hired new lawyers to argue their suddenly renewed case that Facebook founder Mark Zuckerberg stole their idea for his site. The parties agreed to a settlement in February, but last week ConnectU cited new evidence and asked a judge to let it out of the deal. Now, the New York Times reports one of ConnectU's new lawyers is stock fraud expert Sean F. O’Shea of O’Shea Partners in New York. Speculates the Times's Brad Stone:

In Rolling Stone magazine's continuing efforts to be hip and with it, Claire Hoffman was granted dozens of column inches to detail the rise of Facebook, especially including the allegations that co-founder Mark Zuckerberg essentially stole the idea and reneged on promises of coding help to other Harvard students when he realized that he might have a business success on his hands. The list of aggrieved parties is long, starting with Harvard which punished Zuckerberg for invading other student's privacy by creating Facemash to the ConnectU founders and even Facebook's original co-founder, both of whom have sued Zuckerberg for various improprieties. But what does it all boil down to?

Mark Hornick, the lawyer representing ConnectU's Cameron and Tyler Winklevoss, on the "smoking gun" chat transcripts that data forensics expert Jeff Parmet may or may not have discovered on hard drives subpoenaed from Facebook implicating Mark Zuckerberg in grand theft source code: "We don't have them. The courts have them, Facebook has them, but ConnectU doesn't have them." [Silicon Alley Insider]

The ConnectU founders have long argued Facebook founder Mark Zuckerberg used code commissioned by ConnectU, a rival college-based social network, to create Facebook at Harvard. Now, after agreeing to a settlement with Facebook in February, the ConnectU founders want out of the deal. They say instant messaging files found on Facebook's computers offer new "smoking-gun" evidence to make their case.

A judge last summer called the ConnectU founders' claims that Mark Zuckerberg had used code written while employed by them to create Facebook "tissue thin." Yesterday, in the final ruling before Facebook's lawyers decided to settle, a higher court disagreed and rejected Facebook's call for a dismissal. According to the appeals court ruling, Facebook's defense arguments were "either unavailing, or inadequately developed, or both. We reject them out of hand and, for the reasons elucidated above, we reverse the order of dismissal." Facebook and Mark Zuckerberg, unwilling to go on with the case, chose to settle.

Facebook is preparing to settle with ConnectU founders Cameron Winklevoss, Tyler Winklevoss and Divya Narendra. The three allegedthat in 2003, Facebook founder and then-fellow Harvard student Mark Zuckerberg turned code he wrote for ConnectU into Facebook. All motions in the case have been terminated, the New York Times reports — a usual prelude to a settlement. In July 2007, a judge characterized the ConnectU founder's case as tissue-thin, remarking that dormroom chatter does not equate to a contract. Still, the case didn't seem to be going away. Already, inadvertently released court filings proved embarrassing to Zuckerberg, and a trial would likely have revealed worse. What the Times didn't get: the terms of the settlement.

Mark Zuckerberg in his own words:

When I read Facebook CEO Mark Zuckerberg's deposition in one of his pending lawsuits with the founders of ConnectU, who claim he stole the idea for the social network from them, my first thought was, "Did anyone at Microsoft read these before investing $240 million in Facebook?" Zuckerberg is at his worst in these transcripts — by turns arrogant, befuddled, condescending, and obfuscating. And then it hit me.

02138, an independent magazine for Harvard alumni, has done an in-depth profile of Harvard dropout Mark Zuckerberg and the on-campus origins of Facebook. There's plenty on the lawsuit filed by the Winklevoss twins and ConnectU, the Facebook rival for which Zuckerberg did some programming work. But the magazine digs deeper and gets some tantalizing details. Did you know that Facebook cofounder Eduardo Saverin and Zuckerberg sparred over money, and Saverin is suing Zuckerberg for squeezing him out of the company? Or that fellow Harvard alums Sanjay Mavinkurve, Joe Jackson, and Victor Gao also did programming for ConnectU — and thereby might have a claim to the title of wannabe Facebook founders? Aaron Greenspan, whose HouseSystem social network may have inspired Zuckerberg, also makes an appearance. Zuckerberg didn't speak to the magazine for the story, but his response to Harvard's Administrative Board still rings true today.

Digital media types here in New York are always looking for a reason to celebrate their own achievements. A couple of months ago, a few of them began calling themselves the Founders Club and decided to start holding mixers around town. Last night, NBC hosted the latest in the series on the set of Saturday Night Live. Who showed? Mostly wantrepreneurs looking for a VC teat to suckle, of course. But I also ran into Digg CEO Jay Adelson, pictured above; a definitely not-pictured angel Ron Conway, who dodged my camera; a Facebook "founder"; and MC Hammer.

Poor Cameron and Tyler Winklevoss. The athletic and very identical twins are suing Facebook founder Mark Zuckerberg over claims that he stole their idea for a college social network. Now, too, though, they're suffering much the same security woes as their better-known rival, and, if that's possible, not as gracefully. Just as Facebook had its source code leaked, someone has discovered that ConnectU, the comely twins' site, has major security flaws of its own. Flaws so obvious, says the engineer who discovered the flaw, that they beggar the imagination.

FROM THE DESK OF MEGAN MCCARTHY — This weekend, the New York Times ran an article on how entrepreneurs really need to get their paperwork in order before hiring staff, using the Facebook-ConnectU lawsuit as an example. One person's oral contract is another person's "dorm room chit-chat," as the judge in the case put it, and what have you. Or something along those lines. Whatever. I couldn't really pay attention to the text. Did you see that picture? That was a bold move, Mr. Anonymous Times Photo Editor, illustrating the article with a gratuitous full-on crotch shot of one Mr. Tyler Winklevoss. One that I'd like to applaud, if I could stop staring at that image. Goodness.

Facebook has suffered another software bug this weekend — one that displays the site's source code on users' screens. How ironic: Instead of violating its users' privacy, as it did last time when a bug let people see other users' personal data, Facebook has now violated its own. The Facebook Secrets blog has posted the code for the curious, as have others. Facebook lawyers have already started sending cease-and-desist letters asking that the code be taken down, and spokesperson Brandee Barker has requested that people not post it. Which raises the question: What's in the code that Facebook doesn't want you to see?

FROM THE DESK OF MEGAN MCCARTHY — A note to Cameron and Tyler Winklevoss, the inhumanly hunky main plaintiffs in the ConnectU-Facebook lawsuit. Yes, we are aware that you are identical twins. Smolderingly hot identical twins. Yes, we are aware that, in your quest to be Olympic rowers — lean, athletic, sweaty Olympic rowers, we might add — you are used to wearing team uniforms, cut and colored to make you look like clones. This does not excuse the fact that you wore the exact same navy-blue pinstripe suits to your court hearing yesterday. And the same belts. And the same shoes. Good lord, have you no taste?

I listened in live to a conference call with Cameron and Tyler Winklevoss, two of the plaintiffs in ConnectU's lawsuit against Facebook. "You may wonder why ConnectU is holding its first press conference now," says Tyler Winklevoss in a set of prepared remarks. "This dispute with Thefacebook is over three years old." Winklevoss cites his and brother Cameron's schedules as "Olympic hopefuls" training for the 2008 Beijing games. He says that ConnectU is not trying to shut down Facebook. (Oddly, he keeps calling it "Thefacebook," even though Mark Zuckerberg's company hasn't used that name in almost two years.) Cameron Winklevoss then joins in, largely reciting the facts stated in his lawsuit, but also emphasizing that he challenged Mark Zuckerberg shortly after he launched Facebook, not, as some press reports had it, only recently as Facebook became successful.

Facebook gets a reprieve: A judge has delayed a decision on whether to dismiss rival ConnectU's lawsuit for two weeks, seeking more information from the plaintiffs. A new hearing is set for August 8. [News.com]

"Mo money, mo problems," says a Facebook insider. The wisdom of the late Biggie Smalls explains, in a nutshell, why Facebook has found itself in court. A judge in Boston is considering at a hearing today whether to let a lawsuit filed by the founders of ConnectU — the Dickensian-named twins, Cameron and Tyler Winklevoss, and Divya Narendra — against Facebook CEO Mark Zuckerberg and his company proceed. This lawsuit, of course, only exists because of Facebook's supposed success, and the inflated valuations bandied about by board members tired of fending off buyout offers. I'll be covering this story throughout the day, but if you need to catch up, here's the full coverage.

Earlier this week, CNBC asked me to come on the air to discuss Facebook's legal woes. Click to viewI've spent days immersed in legal filings, and the clip, above, just scratches the surface of what I've learned. Next week comes a critical moment for Facebook, the red-hot social network that has captured Silicon Valley's imagination, and its founder and CEO, Mark Zuckerberg. After the jump, I explain why Zuckerberg will face a moment of reckoning next Wednesday, July 25, and detail a timeline of Facebook's legal battles.

Portfolio.com has interviewed Tyler Winklevoss, one of the Harvard graduates who has charged Facebook CEO Mark Zuckerberg with stealing the idea behind the hot social network. Winklevoss, who founded HarvardConnection, a college-networking site now known as ConnectU, appears to be a very angry, bitter young man. We love those types! Here's what Winklevoss had to say to Portfolio about Zuckerberg's actions: "Premeditated, well thought out, duplicitous and conniving." Winklevoss adds, "He messed with the wrong guys." Of course, Winklevoss is more than a bit duplicitous himself in the interview.

As Facebook's theoretical value soars, the interest of its hangers-ons grows practical indeed. I think that's why Cameron Winklevoss, Tyler Winklevoss, and Divya Narendra are pursuing their lawsuit against sandal-sporting Facebook CEO Mark Zuckerberg with such tireless vigor. But the three Harvard school chums, who say they hired Zuckerberg to work on their competing ConnectU site before he launched what became Facebook, are far from the only ones pressing a claim to have been present at Facebook's creation. (For the record, long-suffering Facebook PR chief Brandee Barker says the company's official cofounders are Zuckerberg, Chris Hughes, and Dustin Moskowitz.) After the jump, a gallery of everyone who's not an official founder — but who'd like to be.