Skype in Legal Fight with Joltid over P2P technology

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Randy Savicky
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Skype in Legal Fight with Joltid over P2P technology

Skype and Joltid Limited are in a legal dispute over Skype's licensing of Jolitid's P2P communication technology. This is news to me, since I thought Skype invented the P2P technology used in Skype. Skype's technology roots are in Kazaa, the P2P file-sharing network. Both Skype and Kazaa were co-founded by Niklas Zennstrom. I now come to find out that Joltid is also founded by Niklas Zennstrom. No doubt when Niklas sold Skype to eBay for billions and then founded Joltid, he still retained licensing rights to his P2P technology. How did eBay spend billions on Skype and not retain exclusive rights to the P2P technology? Either eBay is a fool or Niklas is the best damn negotiator on the planet! I'm going to try and reach out to him to find out more.

If Joltid wins, does that mean the end of Skype? No more Skype for iPhone, just days after it was announced? Perhaps Niklas is playing some hardball to renegotiate the licensing terms? Hard to say who's right or wrong until I find out more.

In the meantime, read this from the SEC filing:
As previously disclosed, Skype has been in a dispute with the licensor of certain key technologies and had terminated a "standstill" agreement that had been entered into between the parties, permitting either to take action against the other with effect from March 2009. On March 12, 2009, Skype Technologies S.A. filed a claim in the English High Court of Justice (No. HC09C00756) against Joltid Limited, a BVI company.

In connection with the license agreement between the two companies, Skype licenses peer-to-peer communication technology from Joltid, and Joltid has claimed that Skype has breached the terms of the license agreement. Following the filing of the claim, Joltid purported to terminate the license agreement. In particular, Joltid has alleged that Skype should not possess, use or modify certain software code (the "Code") and that, by doing so, and by disclosing the Code in certain U.S. patent cases, pursuant to orders from U.S. courts, it has breached the license agreement.

On the basis of, among other things, the parties' mutual dealings since the execution of the licence agreement, Skype is asking the English High Court for declaratory relief, including findings that:

(i) Skype is lawfully accessing, in possession of, using and modifying the Code so that Skype is not in breach of the license agreement with Joltid and accordingly Joltid's notice of breach and subsequent notice of termination are invalid;

(ii) Skype lawfully disclosed the Code in the U.S. patent cases so that Skype is not in breach of the license agreement with Joltid and accordingly Joltid's notice of breach and subsequent notice of termination are invalid; and

(iii) Joltid has certain indemnity obligations in relation to the U.S. patent proceedings.

Although Skype is confident of its legal position, as with any litigation there is the possibility of an adverse result if the matter is not resolved through negotiation. In such event, Skype would be adversely affected and the continued operation of Skype's business as currently conducted would likely not be possible.

Also, TMCnet reports:

Skype, a division of eBay Inc. is asking a U.K. court to resolve a dispute with Joltid Limited, which owns peer-to-peer communication technology licensed by Skype for use in its software. In a recently filed claim with the English High Court of Justice in London, Skype is asking the Court to find that Joltid's efforts to terminate the agreement are invalid and that Skype is not in breach of the licensing agreement.

The licensing agreement dispute was previously disclosed by eBay in its most recent annual report, issued February 20. The report states that Skype terminated a "standstill" agreement, allowing either party to take action against the other beginning in March. Joltid is attempting to terminate the agreement based on allegations that Skype has breached its terms. Skype strongly refutes those allegations and is confident of its legal position


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