According to several sources close to the situation, barring any unforeseen delay, a deal to settle the Skype imbroglio is likely to be announced around the time the markets open tomorrow.

[UPDATE: The paperwork is taking longer than expected, so sit tight, said sources.]

While the massive agreement–which will settle three aggressive lawsuits lobbed by Skype co-founders Niklas Zennström and Janus Friis at a wide range of prominent Silicon Valley players–is not yet officially signed, sources said lawyers are apparently putting the finishing touches on the paperwork and have signature papers completed by both sides to be able to wrap it up quickly.

So, while nothing is ever over until it is over, it looks like it is over.

Sources also said that as part of the deal to end the legal madness, Zennström and Friis will get 10 percent of Skype back for rights to key software technology they control, an option to pay $83 million for another three percent of the Internet telephony service and two seats on the 23-member board.

Also, BoomTown has learned that a partridge in a pear tree will be thrown in to guarantee a lasting peace.

All kidding aside, the settlement is proof that squeaky wheels–especially if they hire the combative litigators of Skadden Arps–get the grease.

As has been previously reported, one of the investors in the consortium that won the bidding to buy 65 percent of Skype from eBay (EBAY)–which itself had bought it in 2005 from Zennström and Friis–has withdrawn its investment and involvement as part of the settlement.

That would be London-based Index Ventures, which was a smaller player in the group with–ironically–a three percent stake.

Nonetheless, Index had an outsized fight going on with Zennström and Friis.

That’s due to their ire, aimed at Index’s Mike Volpi, who was CEO of Joost, the failed online video site the pair founded.

After Zennström and Friis lost their own bid to buy back Skype, they quickly sued Index and Volpi via tech companies they control, Joltid and Joost, in Delaware.

The pair alleged that Volpi used confidential information gleaned from his time as Joost CEO to unfairly help the winning consortium acquire Skype.

The lawsuit was particularly vindictive, using embarrassing emails and making pointed accusations about Volpi plotting all kinds of nefarious schemes, like Lady Macbeth on steroids, on his way out of Joost.

I am not sure what law one can break for wanting to leave a job or how much damage one can do to an already failing business, but that did not stop Zennström and Friis from trying to pin some specious accusations on Volpi.

(I wouldn’t have been surprised if they had accused Volpi of being responsible for Balloon Boy.)

But such legal attacks obviously worked, making Index loath to stay in an economically less attractive deal with lessened influence over Skype.

And eBay and the other investors obviously wanted closure, so they could get on with the work of turbocharging Skype.

The fighting between Index and the Skype founders was just one part of the legal morass.

Zennström and Friis had already been in a battle over software licensing issues with eBay in London courts.

They also filed suit again in California against Skype and eBay for copyright violations.

For good measure, the pair added the winning buyout group, including Index, Silver Lake Partners, Andreessen Horowitz and the Canada Pension Plan Investment Board, in that lawsuit.

(In legalese–and in honor of the Yankees winning the World Series tonight–such massive lawsuit-making is called covering all your bases!)

Of course, Volpi and Index fired back in court filings and both sides armed themselves with powerful PR guns.

Presumably, those same mouthpieces–who have been slagging the other side for weeks–will now be at the ready with honeyed tales of reconciliation tomorrow.

Call me cynical, but we’ll see how long that lasts.

“[Zennström and Friis] got what they wanted by using Volpi as a pawn and the lawsuits as a club,” said one person close to the situation. “Everyone is moving on, but not everyone is going to forget what they did to get what they wanted.”

According to sources close to the situation, Index Ventures and Michelangelo Volpi are out of the deal to buy Skype–and their lawsuit-loving nemeses, the founders of the Internet telephony service, are in.

Skype founders Niklas Zennström and Janus Friis had sued Index and partner Michelangelo Volpi via tech companies they control, Joltid and Joost.

The pair had already been in a legal battle over software licensing issues with eBay (EBAY), the company that had sold Skype to in 2005.

They then accused Index and Volpi, employing a reputation-bashing style, of using confidential information as part of a consortium bid to acquire a large chunk of Skype.

Volpi had been Joost’s CEO.

Volpi and Index fired back in court filings and both sides armed themselves with powerful PR guns.

Ironically, Index was only a small part of the group that won the deal to acquire Skype from eBay recently.

News of the serious settlement talks was reported earlier this week by GigaOm’s Om Malik.

The New York Times’s Brad Stone also added significantly to the story about the settlement today, noting the Skype founders would be getting a stake and that Index “is most likely withdrawing from the deal.”

Well, most likely now means certainly for Index, sources told me, and the London-based venture firm that bid for Skype has to bid that deal goodbye.

More details to come, but it’s sure proof that the legal system, such as it was used, works.

The legal high jinks in the contentious battle over the fate of Skype got worse this afternoon, as former Joost CEO Michelangelo Volpi and Index Ventures filed a motion to dismiss a lawsuit brought by the founders of Skype–Niklas Zennström and Janus Friis, via Joost and Joltid–against them.

It’s yet another chess move among a group of well-known tech players, who used to work together closely and are now at odds.

In a filing in the U.S. District Court in Delaware, Volpi and the London-based Index–where Volpi now works–noted, referring to a bid Zennström and Friis made to regain control of Skype, which they sold to eBay (EBAY) years ago:

“Instead of accepting the fact that their bid failed in the marketplace, Friis and Zennström are now using inflammatory and highly-charged litigation–through companies that have no relationship to the Skype purchase–to try to achieve their personal business goals.”

A spokesman for Joost and Joltid did not agree with Volpi’s assessment:

“Mr. Volpi’s latest motion appears to have been prepared prior to Defendants receiving Plaintiffs’ Motion for Preliminary Injunction, which is filled with evidence supporting Plaintiffs’ claims. In light of this strong showing of substantive evidence, much of it from Mr. Volpi’s own correspondence, there is no basis for Mr. Volpi’s assertion that Plaintiffs have somehow failed to state a claim upon which relief can be granted.”

Index was a small player within a group that won Skype, putting in $75 million, in a $2 billion deal that is set to close in the next few weeks.

The motion to dismiss the filing is not surprising given that Joost and Joltid filed a motion for preliminary injunction against Volpi and Index yesterday.

They are asking that he not use knowledge or confidential information he got at the video start-up in current dealings with Skype.

To complicate things further, the innovative and entrepreneurial pair also own a company called Joltid, which has licensed key technology for Skype to eBay.

Joltid and eBay have already been fighting in court over that agreement, bickering back and forth about whether eBay violated the terms of that deal or not.

Via Joltid, Zennström and Friis also filed suit again against Skype and its owner, eBay, for copyright violations in the U.S.

For good measure, they added the winning buyout group, including Index, Silver Lake Partners, Andreessen Horowitz and the Canada Pension Plan Investment Board.

And both Joltid and Joost have also sued Volpi personally, as well as Index, making serious allegations about his behavior as Joost CEO.

Here are several key legal filings to peruse, for all you “Law & Order” types:

Motion to Dismiss _00302105_ –

Opposition to Motion For Expedition _00302104_ –

Volpi Opening Brief 10.15.09 _00302101_ –

But–as many readers have requested–they will all be available in their entirety in this column.

Here’s an interview I did with Barry Diller, the always clever chairman and CEO of IAC, the Internet conglomerate whose holdings include Ask.com, Match.com and many others.

The video of the interview is in three parts, all of which I will post this week.

After a bruising court battle with shareholder and cable mogul John Malone of Liberty Media (LINTA) over the last year, Diller finally broke apart IAC (IACI) just six weeks ago. His reason: The company had become too complex and its stock had suffered due to the operating confusion.

In this second part, Diller talks about the dire digital crossroads in Hollywood, the prospects for the Ask.com search service, his take on the Yahoo-Microsoft takeover battle (no one is a winner here), Google’s dominance, Facebook’s hype (Diller calls the hot social-networking site the “princess phone” of this era) and the power of interactivity.

But–as many readers have requested–they will all be available in their entirety in this column.

Here’s an interview I did with Barry Diller, the always clever chairman and CEO of IAC, the Internet conglomerate whose holdings include Ask.com, Match.com and many others.

The video of the interview is in three parts, all of which I will post this week.

After a bruising court battle with shareholder and cable mogul John Malone of Liberty Media (LINTA) over the last year, Diller finally broke apart IAC (IACI) just six weeks ago. His reason: The company had become too complex and its stock had suffered due to the operating confusion.

In this first part, Diller talks about the details of his court fight with Malone, why he wanted to break up IAC and what it is going to become all carved up, how he is getting back to content creation and also trying out other new online products and how Hollywood is “so inbred, it’s a wonder that the children have any teeth.”

Like I said, always clever.

Don’t miss this very good interview–does he ever give a bad one?–that IAC’s Barry Diller did with The Wall Street Journal’s Shira Ovide in today’s edition.

After a bruising court battle with shareholder and cable mogul John Malone of Liberty Media (LINTA), Diller finally broke apart the Internet conglomerate six weeks ago. His reason: IAC (IACI) had become too complex and its stock had suffered due to the operating confusion.

Here are BoomTown’s three favorite Diller killer quotes from The Journal interview …

On the breakup:

“I don’t have answers for anybody else. What I know is that internal complexity makes for superficiality. There’s never essentially a pure story unless there’s a pure product line that has its own shining clarity.”

On Internet advertising:

“You really want to get a headache? Try to understand Internet advertising. Social-networking advertising is being discounted because there is so much inventory [of available ad spots], and because methods have not yet been found to make it very effective. Will that get figured out? I absolutely believe it will. What form will it take? Absolutely unknown.”

On his fight with Malone:

“It is water down the drain. It’s unfortunate that executives of Liberty forced us into this process that resulted in the court affirming our position, but they did. It was hurtful to the company in which they’re investors, it was hurtful to me, it was a waste of time and money. It’s over. It certainly has no effect because my relations with John Malone are right and proper. They can have board members, but I outvote them.”

And, if you want more Diller unplugged, about all of the above and more, here is the highlight reel from my interview with him in May at the sixth D: All Things Digital conference.

Don’t miss his take on Hollywood children’s teeth.

The entire interview will go up next week in this blog, but here is the shorter video for now:

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!

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.