Skype Founders Claim eBay No Longer Has A Right To Skype's Core Tech

from the this-is-going-to-get-messy dept

Fri, Jul 31st 2009 3:45am — Mike Masnick

As you know, eBay bought Skype for a ton of money a few years back, without having any real plan for what to do with it. There were no synergies between the two, and about the best that can be said for eBay's ownership of Skype is that they didn't kill it (though, frankly, the new UI is so bad, it makes me wonder what they were thinking) and let it continue to grow organically. Earlier this year, eBay finally announced plans to spin off Skype. Fair enough. It can probably do a lot more outside of eBay than from within. However, it turns out that there may be a bit of a legal hitch, as Skype's founders claim that eBay/Skype no longer have the legal rights to Skype's underlying technology. Apparently, the claim is that Niklas Zennstrom and Janus Friis and a separate company they ran, Joltid, only licensed the underlying technology to eBay/Skype for a limited time -- and that deal has now concluded. The two companies are scheduled to fight this out in court.

There are a few interesting asides to all of this. First, it reminds me of how Zennstrom and Friis ended up in another lawsuit a few years back, also involving questions about licensing the core underlying technology of Skype. There's a lot of background here, and not all the details are clear (at all), but that original case involved the claim that Zennstrom and Friis used the same core underlying technology that they used to build Kazaa to build Skype. Way back, Zennstrom and Friis had created two operations: Kazaa and FastTrack, which created the underlying tech used in Kazaa. However, they also licensed FastTrack to a company called Streamcast, that made a product called Morpheus that competed with Kazaa in the file sharing space. Got that?

The folks at Streamcast insist that part of their contract with FastTrack was that they had a right of first refusal on buying the underlying technology. But then, all sorts of stuff happened, with Kazaa being sold off to a group in the South Pacific, but Zennstrom and Friis supposedly retaining some core technology which (Streamcast claims) they used to build Skype. Then, once Skype sold, Streamcast claimed that the whole thing was an elaborate shell game, but in selling the Skype underlying technology, Streamcast claimed that Zennstrom and Friis violated their agreement on having a right of first refusal on purchasing the technology.

Yet, now I'm left wondering if that original claim was true. If the current claim is that Joltid still "owns" the original technology and Skype/eBay only licensed it, then the technology itself might never have actually been sold (unless, we're talking about two separate core underlying technologies... which is possible).

Still... the bigger question? How the hell did eBay make a deal and not make sure it had either purchased (entirely) the core underlying technology or had a guaranteed perpetual license that couldn't be revoked? The eBay Skype purchase was bad enough already. Could it be even more ridiculous in that eBay didn't even properly purchase the technology in question? It seems preposterous to believe that a company could screw up an acquisition that monumentally, so you have to wonder if it's actually true.

In the meantime, since there are questions about how eBay can rebuild Skype's underlying core technology without violating the many patents in the space, it makes you wonder if eBay may be forced to simply buy someone else's technology. Maybe it's time to call up the Gizmo Project (which has built a very Skype-like product) to see what they're up to these days. Though, can you imagine eBay needing to buy another company just to power Skype so it can be spun off again? Yikes!

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Filed Under: ip, janus friis, niklas zennstrom, ownership, skype, voip
Companies: ebay, fasttrack, gizmo, joltid, kazaa, skype

10 Comments

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richard, 31 Jul 2009 @ 4:43am

wait
If windows XP licenses expired in 5 years, MS would have had no problem with Vista adoption.. They should do that with Windows 7.5 and just bury it in the fine print.
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CleverName, 31 Jul 2009 @ 5:10am

Re: wait
They do that with the support. This usually only affects business, but that is their largest income segment, right? And then there is the forced upgrade crap with office apps.
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Anonymous Coward, 31 Jul 2009 @ 5:51am

They sound like they have been taking lessons from the guys from TPB, or the other way around. 101 attempts to be sneaky, never a good thing.
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PopeHilarius (profile), 31 Jul 2009 @ 6:11am

This reminds me of Len Riggio, Barnes and Noble's chairman. A separate holding company which he owns actually has the rights to the Barnes & Noble name, which it leases to Barnes & Noble the bookstore (at like, a dollar a year or whatnot). It's a pretty funny poison pill- a hostile takeover would just net you the brick and mortar, but none of the brand equity.
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Sean T Henry, 31 Jul 2009 @ 10:17am

Re: Re: wait
"...then there is the forced upgrade crap with office apps."

That is why I use and encourage every one to use OpenOffice.org its free for everyone including businesses.
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W Klink (profile), 31 Jul 2009 @ 12:08pm

Gizmo/Google voice
Gizmo is also nicely integrated with google voice. You can have your google voice incoming calls directed to a gizmo SIP address and you can have Gizmo outgoing calls routed through google voice. With that combo, you can have a 100% free VoIP phone (including free outgoing calls to US landlines).
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Ronald J Riley (profile), 1 Aug 2009 @ 6:44am

Congratulations
I believe that this is the first time I have seen Mike write an unbiased article involving intellectual property. Perhaps this is the start of a trend?

One does have to wonder who in eBay was responsible for the idiotic deal they signed on to? I suspect that they will cover the cost of this by bending over sellers on eBay yet again.

Ronald J. Riley,

Speaking only on my own behalf.
President - www.PIAUSA.org - RJR at PIAUSA.org
Executive Director - www.InventorEd.org - RJR at InvEd.org
Senior Fellow - www.PatentPolicy.org
President - Alliance for American Innovation
Caretaker of Intellectual Property Creators on behalf of deceased founder Paul Heckel
Washington, DC
Direct (810) 597-0194 - (202) 318-1595 - 9 am to 8 pm EST.
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Ming the Merciless, 1 Aug 2009 @ 5:06pm

This isn't new news!
The "New York Times" and auctionbytes reported this brand new example of ebay incompetence months ago but no one -- least of all ebay's criminal co conspirators on Caball Street -- was paying attention or pretended not to.

Despite the manipulations of earnings reports, the lowballing of expectations, the misleading reports ebay issues to the public, and possible stock price manipulation, ebay is decaying and crumbling from within due to its arrogantly sociopathic leadership team.

Corporations that can't identify who their paying customers are and that court and coddle non paying customers is destined to fail.
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jacob (profile), 4 Aug 2009 @ 2:11am

i think joltid will have enough suitors...
reading news like this...i think other voip players are more than happy to take over:

Switch to Voipbuster before it is too late!

As it is now becoming more and more clear that Skype’s services will not be available much longer because their software license will expire (license is owned by Joltid, www.joltid.com), it is now the time to switch to VoipBuster;

“Skype is worthless without the license” (source: http://seekingalpha.com/article/153113-skype-s-hold-up-problem )

“Skype might have to shut down" (source: http://community.zdnet.co.uk/blog/0,1000000567,10013367o-2000498448b,00.htm)

“Skype has breached the licence agreement” (source: http://chiefofficers.net/888333888/cms/index.php/news/comms/comms_is_skype_doomed)

To make sure everyone can still use Voice Over IP at even cheaper rates than Skype, Voipbuster has lowered loads of destinations, and no risks at all
So, inform your friends and family to check out Voipbuster and keep calling at perfect quality and cheap rates worldwide and remember Voipbuster users can call each other for FREE!

www.voipbuster.com

Kind regards,

The Voipbuster Team
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David, 17 Jun 2010 @ 8:57am

Free VoIP
Computer-to-computer is an easy way to use Free VoIP and long distance calls are free; you only pay for the software. To use this method, you will need to download and install the software and be equipped with a microphone, speakers, a sound card and a high-speed Internet connection such as DSL or cable.
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