San Francisco — Joltid, a peer-to-peer business owned by Skype founders Niklas Zennstrom and Janus Friis, have sued owner eBay Inc and a group of investor who have gathered their resources to acquire the Webphone service, alleging them of copyright infringement — an action that could potentially disrupt eBay’s plans to sell Skype for about $1.9 billion deal.
Joltid, owned by Skype founders, filed the suit in the U.S. District Court of Northern California. This is the latest in an existing license dispute between the popular VoIP service and its developers. The complaint alleges that Skype violated an agreement over the use of critical peer-to-peer communication technology that Skype licenses from Joltid for use in its software, “in the United States at least 100,000 times each day,” seeks an injunction and damages, which Joltid “reasonably believes are amassing at a rate of $75 million daily,” according to the suit.
“The Skype companies have been continually violated Joltid’s copyrighted works on a massive scale,” the lawsuit stated. “Each day that the Skype Companies continue to make available its Internet telephone software for download, Skype users download Joltid’s copyrighted works approximately six times per second.”
eBay, in 2006 acquired Skype for $2.6 billion, but co-founders Friis and Zennstrom hold-back the rights to Skype’s key peer-to-peer technology — Global Index Software — via the Joltid company they formed.
Joltid finished its license for the software after discovering that Skype had allegedly acquired unauthorized versions of the source code, made unauthorized modifications, and disclosed the software to third persons, according to the lawsuit.
“Skype has infringed Joltid’s copyrights,” a company spokesman said in a statement. “Joltid will vigorously enforce its copyrights and other intellectual property rights in all of the technologies it has innovated.”
“Their allegations and claims are without merit and are founded on fundamental legal and factual errors,” eBay spokesman John Pluhowski said in a statement.
In addition to Skype and eBay, the lawsuit also named as defendants all of those private investors in a consortium that earlier this month signed a deal with eBay to acquire a 65 percent stake in Skype, with eBay retaining 35 percent. The group includes Web browser pioneer and eBay board member Marc Andreessen and former Skype board members Danny Rimer and Mike Volpi, among others.
Analysts have said the once-celebrated Skype business is an incongruous division of an Internet sales and auction house, and many have long urged the firm to spin off the unit or unload it.
The lawsuit has the possibility to at least interrupt the ongoing sale of Skype. In the past, however, eBay has said it is working on its own software to replace what it gets from Joltid. The Internet auction house said on Wednesday it remained on track to close the Skype transaction in the fourth quarter.
According to sources close to the matter, last week said Zennstrom and Friis had approached several private equity firms to try and buy back their old business.
These developments are the latest result of an intensifying legal tussle. At the beginning of this year, Skype lodged a suit in the United Kingdom against Joltid, trying to resolve a dispute over a software licensing agreement between the parties that Joltid was seeking to terminate.
Despite reporting strong growth — Skype’s revenue rose 25 percent to $170 million in the second quarter — eBay’s history with the company has been rocky. eBay finished up bearing a $900 million write-down on Skype in 2007, basically acknowledging it had significantly overvalued it.
eBay earlier this month said that rather than spin off the company through a public stock offering, it would sell 65 percent of Skype to a group of private investment funds for $1.9 billion in cash and $125 million to be paid later. eBay will own the other 35 percent.