News that eBay is facing a
copyright claim from the founders of Skype's innovative
peer-to-peer 'Global Index' (GI) technology has left its
proposed sale of the internet calling business on decidedly
dodgy ground, writes
Nick Wallin, patent attorney at Withers & Rogers LLP. But
there could still be a way out for eBay and innovation is the
key.
In retrospect, questions will undoubtedly be raised about how
much eBay really knew or
understood about the licence agreement it entered into when it
bought Skype in 2005. Skype's
former owners -
Janus Friis
and
Niklas
Zennstrom - claim that the GI technology used to operate the
internet calling service, was owned by Joltid (another company in
which they have a major shareholding) and was only available to
Skype under the terms of a licence agreement.
According to the legal papers submitted by
Joltid in the US last week, the
licence agreement stated that Skype was only authorised to use the
object code and not the source code for its GI technology. This
effectively meant that while Skype was free to use the technology,
it was unable to modify or develop it in any way.
Two years after
Skype's sale to eBay, Joltid claimed that it had discovered
evidence that Skype had been using the source code in order to
develop the technology. The company sent letters to eBay,
challenging them about the alleged breach and threatening to
terminate the licence agreement. The ensuing dispute has led to a
number of legal cases, including one that is due to be heard in the
UK next year.
eBay's
proposed sale of Skype to a group of investors has brought the
issue to a head. The founders of the technology want to clarify
their position and if possible secure further financial reward for
their technology as part of the terms of the sale. While eBay has
not yet issued its defence and may yet be shown to have grounds to
use the GI source code, they are unlikely to be pleased that the
dispute has escalated to a point that could jeopardise the
sale.
Despite the bad timing, there is still a way out for eBay and
innovation is the key. Intellectual property experts often advise
companies on how to design their way around existing patents or
copyright-protected inventions. In this case, it is the original GI
source code that is in issue. If eBay can independently produce an
alternative, they may be in the clear. Another option may be to use
existing instant messaging (IM) or voice over internet protocol
(VOIP) technologies, such as Google Messenger.
On a broader level, there are also lessons to be learned for all
companies considering a sale or acquisition. It is important to
make sure that the company's IP portfolio is in place and secure,
before going ahead with a corporate transaction. In retrospect,
eBay's management team may well have wished that they had taken the
time to negotiate comprehensive ownership of Skype's technologies
at the point of purchase, when the costs involved would have been
considerably lower than today.
For the moment at least, the developers responsible for Skype's
highly successful peer-to-peer technology appear to have the upper
hand but for how long? eBay's position is unknown and the dispute
over the use of the technology's source code is likely to run for
some time yet.