Now, this is gangster!
- Posted by: JP Smith | August 2, 2009
- Filed Under: Business, Law and Order
Imagine you have a wildly popular service, connecting some 480 million users worldwide. Imagine getting ready to launch your IPO and anticipating a big payday. Now, imagine that, in the year leading up to it, you are headed to a court battle and your opponent holds something over your head that could bring the whole thing crashing to the ground. Right now, this is the story of Skype.
This internet telephony service has been around for years. Just a few, short years ago, it was purchased by Ebay but, with a hitch -- a core component driving the whole platform is technology still owned by Skype's creators and original owners, who say Ebay broke the licensing agreement with them and are now looking to terminate that license.
The owners,who now run a company called Joltid, say that Skype "accessed Joltid's source code and modified it -- Joltid then claimed a breach of license."
So, Skype sued in the UK, asking a judge to not allow Joltid to termintate its license. Joltid countersued saying that Skype broke their agreement and that they are within their rights to terminate.
The item in question is the very peer-to-peer technology that allows a call to be distributed over thousands of machines.
So, do you see why I call it gangster? I sell you everything on a Bentley but the engine. I tell you that you should not even be accessing the engine, much less attempting to modify it. You modify the engine and, now, you may be in violation of our agreement, allowing me to take the engine out of the car.
I can't be mad at them for this.
So, it is now up to Skype (and its owner, Ebay) to work it out with Joltid. Because, as Ebay basically admits, the alternative is risky and may not even work:
"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. 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."
The above statement is not one that is soothing to potential investors.
The trial is set to begin in June 2010. If I were Ebay, I would be getting on the stick to clear this up long before then.
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