Skype continues to be one of the biggest headaches for a parent company.
In a legal dispute that may delay eBay's plans to spin off its Skype Web calling service and is certainly forcing eBay to write its own software, Skype and startup Joltid are suing each over a dispute about software source code Joltid licenses to Skype.
Some analysts say the dispute may present an opportunity for Web communications upstarts such as Google Voice.
According to a 10-Q form eBay filed with the Securities and Exchange Commission July 30, Skype licenses peer-to-peer VOIP (voice over IP) software from Joltid, which is owned by Skype co-founders Niklas Zennstrom and Janus Friis. But Skype and Joltid are in a dispute over the license.
In March, Skype Technologies filed a lawsuit against Joltid in the English High Court. Joltid then tried to terminate the license agreement and brought a counterclaim alleging that Skype infringed on Joltid's copyright by using certain Joltid software code.
Skype asked the English High Court for declaratory relief to protect the code it uses to support its 443 million users' PC calls, and trial is scheduled for June 2010. While Skype said in the 10-Q filing it is confident it can win the case, it has begun writing "alternative software to that licensed through Joltid."
Here's where the situation gets dicey; eBay candidly outlined the dangers to Skype. For one, the substitute software will be expensive and could fail. For another, Skype could lose the case versus Joltid and be forced to shut down, leaving millions of people worldwide without the ability to place free calls from their computers. Either way, Skype will be in trouble, as eBay wrote:
""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 was to lose the right to use the Joltid software as the result of the litigation, and if alternative software was not available, Skype would be severely and adversely affected and the continued operation of Skype's business as currently conducted would likely not be possible." "
This could be a problem as eBay CEO John Donahoe prepares to spin Skype out as a public company in the first half of 2010, or within the same time frame of the suit versus Joltid. Skype doesn't really play well alongside eBay's e-commerce market or PayPal.