Skype's Latest Litigation Targets Volpi

Lawsuits are tumbling around Skype like early falling autumn leaves. The most recent Skype litigation is directed at Mike Volpi, once a partner and close confidant of Skype's founders, but now their sworn enemy.

Skype founders Niklas Zennstrom and Janus Friis, already locked in bitter litigation with eBay, have directed their latest lawsuit against Volpi, now a partner at Index Ventures, which has teamed up with eBay and other investors to reconstitute Skype's ownership. Volpi had been an original director of Skype before the Zennstrom-Friis team sold it to eBay for at least $2.5 billion.

In the latest lawsuit filed Friday in a Delaware Court, the Zennstrom-Friis team targeted Volpi and his overlapping positions as a Skype principal, then as head of Zennstrom-Friis WebTV company Joost and now as a principal involved in establishing a new investment entity for Skype that cuts Zennstrom and Friis out of the deal.

Volpi's position as a Zennstrom-Friis ally made a 180-degree turnaround when he became involved in helping establish the new Skype investment team that pointedly left out Zennstrom and Friis. The Skype founders had contacted their own team of investors in an attempt to buy back Skype. While Skype is profitable and has nearly 500 million registered users, eBay decided to unload the VOIP property after it found that the calling business offered little synergy to its main online auction business.

In the latest Zennstrom-Friis litigation, Volpi is charged with misusing confidential information. Volpi helped set up the $1.9 billion sale of Skype ownership by eBay last month.

The main bone of contention centers around JoltID, another Zennstrom-Friis company that provides the peer-to-peer software that powers Skype. When eBay bought Skype in 2005, it neglected to include ironclad rights to the software and the Skype founders are suing eBay, and threatening to close down Skype if an agreement isn't reached by all the parties.

Very big money is involved in the saga. Zennstrom-Friis have charged that daily damages of $75 million are adding up because of Skype's alleged illegal use of the JoltID software. And, according to a report in the New York Times over the weekend, an unidentified source said Zennstrom and Friis were offered "hundreds of millions" in Skype stock, but turned down the offer.

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