After being sued by Facebook in December for violating its terms of use, social-networking aggregator Power.com is now close to settling the dispute, we have been able to confirm. The final settlement terms are still being ironed out, but are being reviewed by both sides.

Power.com lets you sign into multiple social networks and manage them from one place, but it did not use Facebook’s API or Facebook Connect. As part of the settlement, Power will access this data via Facebook Connect. Power was scraping the data from Facebook and caching it, which it won’t be allowed to do with Facebook Connect.

Facebook is very particular about how it wants other Websites to access its user data. Facebook had similar problems with Google’s Friend Connect, although it simply banned Google from using its API rather than bring a lawsuit.

For Websites and services that want to tap into Facebook’s rich trove of user data (it now has 150 million active users worldwide), it has to do so by Facebook’s rules. But one of those rules, in particular, many partners are finding restrictive. They are not allowed to cache any data, so they cannot build their own user profiles or make their services smarter over time. There are good privacy reasons for not allowing other (possibly unscrupulous) sites to cache the data, but it also serves to limit innovation.