IN ITS QUARTERLY REPORT TO THE SEC (Securities and Exchange Commission), SKYPE has warned of the possibility of its being forced out of business because of a patent lawsuit that was recently filed against it.
The popular internet phone service that permits computer-to-telephone communications free of charge is owned by eBay who purchased the company in 2005 for $2.6 billion (with a “b”) from the founders who brought it online in 2002. It currently has 480 million registered users making it the most widely-used international calling system in the world, and most recently had a 25% increase in the 2nd-quarter of this year.
In April eBay announced plans to spin off the company because it does not mesh well with their core market operations.
The London Times briefly describes the legal conflict:
Earlier this year, Skype filed a claim in London against Swedish company Joltid, which is controlled by Skype co-founders Niklas Zennstrom and Janus Friis. Skype is seeking resolution on a dispute over a software licensing agreement between the parties that Joltid was seeking to terminate.
“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 US patent cases pursuant to orders from US courts, Skype has breached the license agreement,” eBay said in the filing.
Joltid brought a counterclaim, reiterating that it held the rights to the peer-to-peer technology and that Skype was in violation of the original agreement.
“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,” eBay writes in their SEC filing. “Skype has begun to develop alternative software to that licensed through Joltid. However, such software development may not be successful, may result in loss of functionality or customers even if successful, and will in any event be expensive.”
If Skype loses the right to use a key part of its software and can’t create an adequate replacement, “Skype’s business as currently conducted would likely not be possible” they continue, indicating a strong possibility that a loss of the suit would result in a shutdown of the business. The court date was set for June 2010.
Read more about this story in The Guardian HERE and in CNN International HERE.
eWeek.com has a more in-depth explanation of the lawsuit along with a theory on why this presents a golden opportunity for Google Voice HERE.
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