Skype founders take eBay to court

The original founders of online telephony service Skype have filed a lawsuit against eBay, and an investment group who recently agreed to buy the service, seeking millions of dollars in damages for unlicensed use of a network technology they own.

This latest lawsuit seeks a permanent injunction against Skype, as well as damages which the pair believe are increasing at a rate of more than $75 million a day.

Niklas Zennstrom and Janus Friis founded Skype in 2003 before selling it to eBay in 2005 for $2.6 billion. eBay recently agreed to sell a 65 percent stake in Skype for $1.9 billion to a consortium of investors.

The disagreement is over a piece of technology called "Global Index", which is responsible for some of the peer-to-peer sharing systems that run Skype. When eBay bought Skype in 2005, it decided not to purchase Global Index, instead opting to license it from Joltid, a separate company started by Zennstrom and Friis in 2002.

The pair allege that when they left Skype in 2007, eBay began to alter the code used in Global Index, breaching the license agreement. eBay however, have denied the allegations, stating "Their allegations and claims are without merit and are founded on fundamental legal and factual errors."

The case has not only cast doubts over the sale of Skype, but the service itself, with eBay admitting that without Global Index, Skype could no longer function.

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18 Comments

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Ebay was so stupid to not buy ALL of Skype... I really don't understand why a company would EVER buy a product like that and still rely on the previous owners of the property for such a major component... I've never heard of such a poor choice...

I worked at a place that made a medical implant, they sold the company to another company for $25 Million dollars, lock, stock, barrel and everything... except for the processor chip that controlled the inplant, which they sold after the buying company discovered it owned a bunch of nothing for another $25 Million dollars, plus a big chuck of the buying companies stock and a seat on the board of directors. I guess it's a good way of insuring a future income. Needless to say the buying company was not very happy about it, but what choice was left to them?


skype is a great tool.....i hope good things come out of this and not problems for skype users..

the founders of skype seemed to have done a shrewd business deal indeed....without full disclosure to the buyer on how the skype service works.

I'm with you on that one.

Anyone know of a FREE alternative to Skype (other than things like Ventrilo) that has roughly the same call quality and allows for conferences?

iamwhoiam said,
I'm with you on that one.

Anyone know of a FREE alternative to Skype (other than things like Ventrilo) that has roughly the same call quality and allows for conferences?


that's the problem... there really is none
maybe google's voip service...

SK[ said,]If I sold my company for $2.6 I couldn't care less what they did with it.


That's just the thing though. eBay didn't buy everything, and chose to simply license a significant part of the underlying technology. Then eBay decided they wanted to make changes to the code that they didn't own.

When eBay bought Skype in 2005, it decided not to purchase Global Index

IMHO, Skype sold eBay everything they wanted. The problem to me is that eBay didn't want everything, and chose another way for a vital Skype technology. I have no idea why they did that, but that's how it reads from Skype's POV anyway.

I imagine the problem here is (that's the only way I can see that it *is* a problem) that it was cheaper to license it from Joltid, but then they instead had no full rights to alter the code, something I assume they had if they had purchased it as part of the original deal.

A number of guesses here, but I blame that on Reuters reporting.

This one will run for years.
Without knowing the absolute truth it looks like the Skype founders pulled a very shrewd business move which Ebay have tried to wrangle out of.