Skype may risk shutdown after legal dispute

31 Jul 2009

Due to a licensing dispute between popular VoIP service Skype and Joltid – the company from which it licenses its peer-to-peer networking technology – owner eBay may shut the service down and has already begun developing alternative technology.

When eBay bought Skype in 2005 for US$2.6bn, the VoIP service was already tied into licensing with Joltid, without whose technology Skype cannot operate unless an alternative software solution is developed in time.

Skype says the dispute will not be resolved: “Our plans to separate Skype have not changed. We have no comment on the litigation beyond our 10-Q disclosure.”

The 10-Q disclosure to which Skype refers details the dispute: “In March 2009, Skype filed a claim in the English High Court of Justice against Joltid Limited. Following the filing of the claim, Joltid purported to terminate the license agreement between the parties.”

“In particular, Joltid has alleged that Skype should not possess, use or modify certain software source code and that, by doing so, and by disclosing such code in certain U.S. patent cases pursuant to orders from U.S. courts, Skype has breached the license agreement. Joltid has brought a counterclaim alleging that Skype has repudiated the license agreement, infringed Joltid’s copyright and misused confidential information.”

The trial is scheduled for March 2010 but right now it is difficult to tell of this will affect Skype’s operation in the meantime and whether eBay will have built and deployed replacement technology.

By Marie Boran