Bernstein Research's Jeffrey Lindsay says new litigation filed by Joltid against eBay, Skype and its pending investors stems from the Joltid owners' failure to buy back Skype from eBay. Joltid is looking to enjoin Skype from operating in the United States and seeks $75 million-plus per day in damages. Joltid's owners earlier this year tried to buy back Skype but balked at what they believed was too high a price from eBay. Lindsay says the suit is designed to thwart the current eBay sell-off until the Joltid owners get a payout.
An analyst from Bernstein Research said new litigation filed
by Joltid against eBay, Skype and its pending investors stems from the Joltid
owners' failure to buy back Skype from eBay.
Joltid, the peer-to-peer software company owned by Skype co-founders
Janus Friis and Niklas Zennstrom, sued Skype, eBay and erstwhile
investors in the company for copyright infringement in California
court Sept. 16. The startup asked the court for an injunction and for
damages north of $75 million per day.
The new suit builds on litigation in the United Kingdom going back
to March 2009. eBay licenses P2P software from Joltid called the "global
index," which enables Skype to let users make voice calls from their
computers to other computers, landline and mobile phones.
Earlier this year, Skype and Joltid
in a dispute about that technology. In March, Skype and Joltid
sued each other over Skype's right to use the technology. Joltid alleged Skype
not only unlawfully modified its global index source code but made it available
to third parties. Trial is scheduled for June 2010.
The new suit is a reaffirmation of Joltid's claims in the
"Each day that the Skype Companies continue to make
available its Internet telephone software for download, Skype users download
Joltid's copyrighted works approximately six times per second," Joltid
claimed in its suit. "Based on conservative estimates, Joltid believes
that its copyrighted works are infringed in the United States at least 100,000
times a day through defendants' unauthorized actions."
The new suit also seems intended to head off the current
blockbuster deal to make Skype an independent company, according to Bernstein
analyst Jeffrey Lindsay. In that deal, eBay plans
to sell 65 percent of Skype to Silver Lake and other investors, valuing
Skype at $2.75 billion. eBay, which stands to retain 35 percent of Skype, hopes
to close the deal in the fourth quarter, but the pending lawsuit could threaten
"We see the lawsuit as self-interested because the
owners of Joltid tried to buy Skype themselves earlier this year," wrote
Lindsay in a research note Sept. 17. "We doubt therefore that their objective is
to have the business permanently shut down - which we estimate would cost eBay
shareholders up to $2.12 per share worst case. Instead we think they are likely
to be seeking either a financial settlement or the opportunity to buy the
business back themselves at a lower price than Silver Lake, et al are offering."