eBay’s Skype Deal in Peril



skype-logoJust when eBay thought they had moved Skype, the Wall Street Journal tells us “Not so fast!” A copyright suit has been filed in Northern California by the founders of Skype over the use of a technology by Skype. The license to continue its use ended in March and since then the founders of Skype and the flounders that bought it have been duking it out in a the UK which has already cast doubt on the deal. The added US suit really puts the Skype deal in jeopardy.

The suit, filed Wednesday in the Northern California U.S. District Court, extends the drama behind eBay’s tumultuous relationship with Skype.

Skype’s founders, Janus Friis and Niklas Zennstrom, left Skype in 2007, two years after eBay bought the online communications provider. Their company, Joltid Ltd., has been embroiled in an intellectual property dispute with Skype since March, putting a cloud over eBay’s efforts to unload Skype.

At the heart of the dispute is a peer-to-peer technology called “global index” that is owned by Joltid. That technology is also used at the core of Skype’s software, which routes calls over the Internet instead of traditional phone lines.

As if the Skype saga hasn’t been dramatic enough (you know that little $900 million write down eBay had to endure?) this really makes for some business theater. Joltid is looking for an injunction against Skype and damages that could be in the range of $75 million daily based on its attempt to claim profits made during the time the license was suspended to the present.

I suggest you take a run at the WSJ article to see just how nasty and contentious this thing is getting. Business can at times be difficult but not only does there appear to be some bitterness and animosity between the founders of Skype and eBay but they have even named the investors looking to buy Skype in the suit as well. The claim is that the investor group knew there were violations. Now the whole thing is up in the air.

EBay has acknowledged the fight with Joltid could affect Skype’s operation, and possibly closure of its sale. In a regulatory filing, eBay said consummation of the sale was subject to there being no changes in Skype that have an adverse effect on the company, as well as consent from the buyers on the settlement of pending litigation.

So pull up a chair and grab a snack because this could get interesting. Maybe it’ll be the business equivalent of a mixed martial arts brawl but if this follows the form of most of these things it will end up looking more like a WWE production.

As a user of Skype I just want them to figure it out and make sure the service isn’t disrupted. While that sounds nice I think that the possibility of Skype’s service being ‘interrupted’ looks better than ever.