Stallone is both writing and directing Rocky Balboa

Stallone had been involved in the dispute with Chuck Wepner since 2003.

Wepner said the character of Rocky Balboa was based on him - especially his fight with Muhammad Ali in 1975 - and wanted compensation.

But lawyers have now filed notice that they have settled the legal action for undisclosed terms ahead of the release of the sixth Rocky film in December.

Wepner claimed Stallone did not keep promises that he would be paid for the use of his story and that the actor improperly used his name to promote the films.

Chuck Wepner (right) knocked Ali down - but went on to lose the bout

He was seeking $15m (�8.9m). But Stallone said Wepner had already benefited by making public appearances as "the real Rocky".

Stallone has previously said he was working on a screenplay about a boxer when he watched Wepner, an unheralded New Jersey club fighter, fight Muhammad Ali.

Wepner almost lasted the distance against the world heavyweight champion, only losing on technical knockout with 19 seconds to go.

In Rocky, the eponymous hero, a loan shark enforcer, ends up with a fight against the world champion and goes all 15 rounds against him - but loses on a split decision.