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(with David Kaplan) Just as eBay (NSDQ: EBAY) is ready to sell off the 65 percent of Skype, the founders of the virtual telephone company are suing the auction site for violating their license agreements and infringing on their copyright. According to the WSJ, Skype founders Janus Friis and Niklas Zennstrom, whose holdings include the P2P tech provider Joltid, filed suit today in the U.S. District Court of Northern California seeking an injunction against Skype, which uses technology owned by Joltid, and damages. In March, Joltid canceled the license for Skype’s software; eBay and Joltid are already in litigation in the U.K. over Joltid’s cancellation last spring of eBay’s license to use its Global Index P2P code. In this suit, among other allegations, Joltid claims that the GI source code is being misused and that every time Skype is downloaded or used in the U.S., Joltid’s copyright is being infringed. EBay responded to a request for comment late this afternoon, saying, “Their allegations and claims are without merit and are founded on fundamental legal and factual errors.”
The defendants include eBay and Skype Technologies, as well as the members of the investor group that just agreed to take over Skype pending a closing later this year: Silver Lake Partners, Index Ventures Management, Andreessen Horowitz LLC (Marc Andreessen is also on the board of eBay), and the Canada Pension Plan Investment Board. The suit also personally names Michaelangelo “Mike” Volpi, a partner at Index Ventures who was CEO of Joost, the video company started by Zennstrom and Friis; he was removed as chairman of Joost last week.
Ebay acquired Skype about four years ago for $2.6 billion. But that history has been difficult and eBay earlier announced plans to sell off 65 percent of Skype for $1.9 billion to the investor group. Joltid is not seeking to halt the sale, attorney Lawrence Hadley told paidContent, and has not asked for a restraining order.
If the investors choose not to move forward, Hadley said, that would be a business decision on their part: ‘The sale is relevant to the copyright claim only in that it affects who is controlling and who is responsible and who is liable for the infringement.” In its statement, eBay insisted the sale will happen: “We remain on track to close the transaction in the fourth quarter of 2009.”
That doesn’t mean the sale will go through — Joltid wants to shut Skype down and it’s the investors, not eBay, that need to stay the course. EBay also stands to get a $300 million termination fee is the deal falls apart. On the other hand, one of the conditions of the sale is “the absence of any injunctions relating to certain specified litigation matters.” The deal also calls for eBay to pay 50 percent of any “monetary judgment that is rendered following the closing of the transaction.”
This follows the unceremonious removal of Mike Volpi as Joost chairman. Volpi was on the board of Skype when it was a startup, was brought on by Friis and Zennstrom to run their video plaftorrm Joost and left as CEO this summer to join Index Ventures, an investor in both Skype and Joost, remaining as chairman until last week. Index Ventures is part of the investment group that won the bid for Skype, with Volpi as one of the Index contacts. It was thought that Volpi might be able to smooth things over between the founders and incoming investment group. Instead, they went after him publicly late last week, claiming he had been removed by shareholders (some shareholders weren’t informed of the move) and was being “investigated.’ Now they’re suing him — the only individual listed as a defendant. Volpi has had no comment.