Skype might have to shut down because of a dispute over the core technology used to make the internet telephone system work. EBay, which paid $2.6 billion (£1.6 billion) for the voice-over-the-internet system in 2005, is facing a court battle with the original founders of the company who retained the rights to the technology at the heart of the system. EBay admitted in a regulatory filing that it might have to close down the company. It said it was trying to develop alternative software but if that did not work, or if eBay lost the right to the original software: "Skype would be severely and adversely affected and the continued operation of Skype's business as currently conducted would likely not be possible." The dispute also threatens eBay's plan to spin off Skype, scheduled for next year.

"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. A court hearing has been set for June 2010 in London. In its regulatory filing confirming the parent company's recent quarterly profits, eBay acknowledged that the new software it was working on had no guarantee of success. "Although Skype is confident of its legal position... 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," eBay said. EBay announced in April that it would spin off Skype through an IPO, saying the timing would depend on market conditions. Executives acknowledged that the unit, while fast-growing, did not mesh well with eBay's core marketplaces division. Mr Zennstrom and Mr Friis, backed by a number of private equity houses, have been in talks with eBay over the possibility of buying the company back but the negotiations have stalled. Skype, which started in 2002, allows users to make calls from their computers to landlines, mobile phones and other computers. At its heart is key peer-to-peer technology created by its founders who also created the file-sharing software Kazaa. The service has continued to grow rapidly. The unit’s revenue increased 25 per cent during the second quarter from the previous year to $170 million, according to eBay's results earlier this month. It added 37.3 million users, bringing its total number of registered users to 480.5 million, making it the most widely-used international calling system in the world. The legal battle over the licensing of the software will need to be resolved before eBay's board, led by chief executive John Donahoe, can move forward with flotation plans for Skype. Yesterday eBay declined to comment beyond the regulatory filing. A spokeswoman said: "Our plans to separate Skype have not changed." A spokesman for Joltid said: "Skype has breached its licence and infringed Joltid's intellectual property. As a result its licence has been terminated. Joltid is enforcing its rights in the courts. Like any member of the creative industries, Joltid will defend its innovations with determination. It is certain of the validity of its position and looks forward to the resolution of the issue."

That would suck... I use skype a lot.

Sounds like the creators are wanting to buy it back, and using the core software license as leverage...

Lets see what happens, no doubt it will be years going through the courts.

Such as big business,very hard to work out any of their true intentions except to rip a bit more

money from some one.

Posted by narak_mai [ 1 August 2009 | 3:44AM ]

That would suck... I use skype a lot.

Sounds like the creators are wanting to buy it back, and using the core software license as leverage...

Lets see what happens, no doubt it will be years going through the courts.

.......grrrrrrrrrrrrrrr.....indeed baby............

480 million people use Skype, so it would be a huge blow to the world community in general.

The other VOIP communication systems may or may not be as good in terms of their capabilities, but they are certainly way more limited in terms of user numbers, and therefore in their general worth to the community.

I think that it's about time the courts started to be a bit realistic and make sure that their rulings take into account the wider picture. I hope they do so when they hear and review this case.

The guys who sold the core technology obviously did not expect it to get as big as it has, and now maybe realise they sold it too cheap, or didnt set up the on-going license properly, so now want a slice or a bigger slice, of the action.

SightSpeed is better. Get your friends to sign up to it now.

http://www.sightspeed.com/download

I agree with Twice-shy that Sightspeed has better video, and some good features, and I signed up for it a while ago..

The thing is all of my friends are on Skype. I will wait and see what happens to there before worrying about it. This will drag on through the courts for a while before anything ever happens, if indeed it ever does happen.

Its ALL about MONEY