Skype Founders File Copyright Suit Against eBay

The legal move comes days after eBay said it would sell two-thirds of its VOIP unit to a group of investors for $1.9 billion.

William Gardner

September 17, 2009

2 Min Read
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It's clear that Skype's European founders have adopted a very American practice -- hardball -- as the founders this week took their aggressive litigation against eBay, already filed in the UK, to the US, in a copyright suit filed in U.S. District Court of Northern California.

JoltID, the software company controlled by Skype founders Niklas Zennstrom and Janus Friis, charges that the statutory damages it is citing against eBay could total more than $75 million a day. Zennstrom and Friis sold Skype to eBay for $2.4 billion in 2005, but left Skype and eBay after Skype didn't produce the hoped-for synergy with the online auction company. One of the burning unanswered issues is whether eBay protected the software that JoltID says is crucial to the operation of Skype.

The latest litigation comes just days after eBay said it would sell two-thirds of Skype to a group of investors for $1.9 billion. The litigation could complicate eBay's deal with its new Skype investors, Silver Lake Partners, Index Ventures, Andreessen Horowitz, and the Canada Pension Plan Investment Board.

In a statement, eBay said: "We remain on track to close the transaction in the fourth quarter of 2009." It added that JoltID's "allegations and claims are without merit and are founded on fundamental legal and factual errors."

Previously eBay said in a Securities and Exchange filing that Skype might have to shut down if it loses the litigation with JoltID, although it noted, too, that it has been developing software workarounds to ensure that the VoIP service wouldn't be interrupted. The Skype founders are also seeking an injunction against eBay's continued use of the Internet calling service, which has more than 400 million registered users.

Earlier this week, Joost reported that it had removed Mike Volpi as chairman. Joost is a struggling Web TV firm founded by Zennstrom and Friis. Volpi, who was also an early investor in Skype, remains a partner in Index Ventures, which is now an investor in the reconstituted Skype.

Zennstrom and Friis rode the peer-to-peer software phenomenon, starting with their Kazaa, which they sold to concentrate on Skype, then with Joost. The two Europeans maintain that they kept ownership and valid licensing rights to the source code used by Skype even after they left the VoIP calling company.

According to several media reports, Zennstrom and Friis have expressed an interest in repurchasing Skype and have contacted venture capitalists and investment firms to assist in a takeover.

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