Suit Up: Skype’s Founders Sue eBay for Copyright Infringement

The tussle between Skype's founders and eBay just went nuclear: JoltID is suing eBay and an investor group for damages of up to $75 million a day.

The legal tussle between Skype founders Niklas Zennstrom and Janus Friis and online auction house eBay looks like it’s going to turn into a shooting war: Skype’s founders, via their company Joltid, have filed an infringement suit in the Northern California U.S. District Court accusing eBay and a group of its investors of infringing on Joltid’s intellectual property on a massive scale through continued operation of Skype services. Joltid wants an injunction that would prevent eBay from using Joltid’s intellectual property, as well as damages that Joltid “reasonably” believes could amount to $75 million per day.

The case centers around the core peer-to-peer networking technology at the heart of Skype: when eBay acquired Skype in 2006 for $2.6 billion, it somehow left the crown jewels on the table: Skype founders Friis and Zennstrom retained the rights to Global Index Software, the peer-to-peer software underneath Skype, and merely licensed it to eBay. As eBay has increasingly soured on the Skype deal—and recently announced an agreement to sell off a majority stake in the VoIP operation—Joltid announced it was terminating the license agreement with eBay because, Joltid claims, eBay obtained and modified source code without Joltid’s authorization, and disclosed the technology to third parties. For its part, eBay denies that it has violated its license agreement with Joltid, and furthermore is working on its own software to replace Joltid’s peer-to-peer technology.

The case mirrors similar litigation underway in the United Kingdom; however, that suit isn’t scheduled to go to trial until mid-2010. Joltid’s U.S. lawsuit targets both eBay and the group of investors set to purchase the majority share in Skype, and may be a serious complication to the deal.