Skype Founders Sue eBay, Investment Group

Skype founders Niklas Zennström and Janus Friis, through their company Joltid, filed suit against Skype in the Northern California U.S. District Court. earlier today, a move that could hinder eBay’s plans to sell 65% of the company to a group of investors.

Skype's founders are suing the company and investors for copyright infringement

Skype's founders are suing the company and investors for copyright infringement

The investor group, including Silver Lake Partners, Andreessen Horowitz, and Index Ventures, was also included in the suit.

Joltid holds the rights to some of the core technology used by Skype, technology  that eBay allowed Zennström and Friis not to include in the sale when it paid $2.6 billion for Skype in 2005.  Zennström and Friis left the company two years after the acquisition.  Joltid’s main product, Global Offering, is a self-organizing and self-healing peer-to-peer technology and is covered by U.S. patent 7,480,658.  Skype uses Global Index to enable voice, video, and chat communications.

The licensing arrangement has been seen by some as potential leverage that would allow the two to reacquire Skype from eBay once the company had decided to sell it, although eBay ultimately took a different course.  Earlier this year, Joltid alleged that Skype and eBay were in violation of the licensing agreement for the technology and terminated the agreement.

Joltid is seeking an injunction against Skype, damages for copyright infringement, and profits that Skype has made while using the technology in breach of its license.  The suit claims that Skype is using the Global Offering technology “in manners unauthorized by Joltid,” including making the software available to third parties as well as copying and altering it.

EBay, in SEC filings concerning the Skype sale, said it is working on developing technology that will replace what it licenses from Joltid. It also said that consummation of the deal was subject to “no settlement of the pending litigation with Joltid Limited having been effected without the consent of the Buyer (subject to certain limitations).” EBay, citing pending litigation, declined to comment.

The investment group was organized by Michelangelo Volpi, now a general partner at Index Ventures.  Volpi is the former CEO of video company Joost, which in turn is owned by the two Skype founders.  He was recently removed by a shareholder vote from Joost’s board of directors and from his position as chairman of the board.  Volpi is also named in the suit as a defendant.

Jonathan B. Spira is the CEO and Chief Analyst at Basex.

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