Skype Sold for $2.75 Billion, but Patent Troubles Are not Over

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Skype Sold for $2.75 Billion, but Patent Troubles Are not Over

eBay sold Skype for $2.75 billion, but the patent woes don't end with eBay offloading Skype. eBay will actually keep a 35% equity stake and sell a 65% stake to a buying consortium. eBay also gets $1.9 billion in cash, and a $125 million note. eBay sold Skype to a consortium led by Silver Lake that includes Index Ventures, Andreessen Horowitz and the Canada Pension Plan (CPP) Investment Board. The transaction, which is not subject to a financing condition, is expected to close in the fourth quarter of 2009.

The question is whether or not the buying consortium has struck a deal with Joltid Limited who is currently in a legal dispute over Skype's licensing of Jolitid's P2P communication technology. Skype's technology roots are in Kazaa, the P2P file-sharing network. Both Skype and Kazaa were co-founded by Niklas Zennstrom. Joltid is also founded by Niklas Zennstrom & Januus Friss and apparently when Niklas & Januus sold Skype to eBay for billions and then founded Joltid, they still retained licensing rights to his P2P technology.

Joltid has sued eBay over the licensing rights and this acquisition doesn't change the equation unless there are some negotiations currently under way between Joltid and the buying consortium. I find it highly unlikely they would shell out billions without first evaluating their chances of winning a lawsuit against Joltid or have currently negotiated licensing with Joltid.

eBay offloading 65% still doesn't limit their liability with regards to the lawsuit, though it certainly does reduce it. It'll be interesting to see how Joltid responds to this deal.


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