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
Technorati
Del.icio.us
Slashdot
Digg
twitter
This was public knowledge shortly after the eBay acquisition of Skype. I raised this as an issue at the time to underline the question of how eBay could value Skype at the value they did (remember, it was $4.1 Billion). It was pretty clear at the time this was a rushed decision, acquisition and proper due diligence was not done. Good thing Meg is already gone running to replace Arnie.
You have to hand it to Mr Zennstrom, he just keeps on winning.
I worked on Kazaa at the same time Skype was being developed in the labs at Joltid.
There is a history of this greed so let me lay it out:
Kazaa was built as a client on top of a p2p library named FastTrack.
Joltid which was known as "consumer empowerment" at the time licensed the FastTrack p2p stack to Grokster. Having said that the Kazaa client was made brand-able. The 3 guys that built the original FastTrack library did not use proper Cryptographic code at the time and decided to build their own because Nick and Janus wanted the protocol to be protected so they could build the empire. Now back to Grokster, this same thing happened to them but it was supposedly due to default payment for the FastTrack license. In this case both parties denied what really happened and we do not know the real truth to this day.
Here are some facts:
The FastTrack p2p library has built in code functions to disable encryption, much like revoking a signed key, just using really bad crypto code. The end result is an inoperable p2p library.
Skype wasn't built directly from the FastTrack p2p stack, it is another source tree/ project and uses PKI properly instead of home grown crypto code.
Joost wasn't built from the FastTrack nor Skype source tree, it too is another project.
So what we have here is very simple, Joltid doesn't and never has sold their p2p code to anyone, ever. I tried to make this public to ebay at the time of acquisition but as the first poster said it was a "rushed decision" so nobody cared.
This is a trend with Zennstrom and it is how he wins every time.
Lastly, I personally believe that they can take Skype off the internet remotely as they did to Grokster and since they did it to a very large audience I don't see why this case is any different from the first.
Conclusion: Buyer beware and don't lease software that can be disabled remotely by the vendor. Also, never purchase or lease software that is self encrypted, compressed or obfuscated because it's not intellectual property that is being hidden, it's always something else, and I say this because I can circumvent their "binary protection" code and what I have seen is nothing short of scary.
Great info Julian! Thanks for commenting.
I'm unclear on one point though.
You wrote "Skype wasn't built directly from the FastTrack p2p stack, it is another source tree/ project and uses PKI properly instead of home grown crypto code"
So if Skype is NOT using the FastTrack p2p library than how can "I personally believe that they can take Skype off the internet remotely as they did to Grokster" be true?
It sounds like you're saying Joltid has the power to remotely revoke the "leased" software from Skype, but that contradicts your other statement about Skype not using FastTrack p2p library. Unless Joltid is a different, but similar library than the FastTrack one and Skype is using that which Joltid can revoke.
Can you elaborate/clarify?
thanks.
If they put this in Fasttrack and used it against a client then there is a great chance it's there in Skylib(official name). I also believe they would do this again given the opportunity. Their programming trends have not changed as I have seen through my own eyes by looking at their code from a reverse angle. They also protect the binary code across all platforms too much too not be hiding code. They say this is to protect intellectual property but that is untrue. I can remove these protective measures, Joltid knows this and they asked me to "teach them" back in 2003-2004 in which I refused. Lastly anyone that uses self modifying code isn't doing it for any good reason. The entry point in Skype is much like many binary worms, encrypted, compressed and displaces the OEP. Kazaa did this and same for the Joost P2P Plugin Helper, so I am talking about programming trends and scary ones at that.
Julian, Couldn't eBay hire you then to remove the protective measures so that they could back-out/remove/block the ability for Joltid to remotely take down Skype?