RealTime IT News

Skype Founders Not Done Filing Lawsuits

The founders of Skype filed a new lawsuit on Friday against Index Ventures and one of its partners, Michelangelo Volpi, accusing him of stealing trade secrets to help broker the sale of the Internet phone service owned by eBay Inc.

The lawsuit follows another filed this week by Skype founders Niklas Zennstrom and Janus Friis, accusing eBay and a group of potential investors, including Index Ventures, of technology theft.

The legal battles threaten to disrupt eBay's sale of a majority stake in Skype to the investor consortium for $1.9 billion. They also underscore the acrimony between Skype's founders and Volpi, a former high-flyer at Cisco Systems Inc whom they had known for years.

Volpi had served on Skype's board and the pair of entrepreneurs recruited him to head another company they founded, the Web TV venture Joost.

The founders said in Friday's lawsuit that Volpi misappropriated confidential information as he moved from Joost to Index Ventures, and helped orchestrate its bid for Skype.

"Volpi has maliciously and willfully breached his fiduciary duties," the plaintiffs said in their complaint.

Volpi could not be reached for comment, while Index Ventures declined to comment.

At the heart of those lawsuits is the peer-to-peer technology that is used to deliver video and phone services over the Internet.

Joltid, yet another company the two entrepreneurs founded, sued eBay and the investor consortium earlier this week, claiming that Skype was using this proprietary technology without authorization. Joltid and Skype have also been in a legal battle in Britain over rights to the technology.

Buying Skype

Sources last week said Zennstrom and Friis had previously contacted several private equity firms to try to buy back their old business, Skype.

Ebay, however, agreed to sell a 65 percent stake in Skype to the consortium including Index, private equity firm Silver Lake, Netscape founder Marc Andreessen's Andreessen Horowitz and the Canada Pension Plan Investment Board.

Friday's lawsuit said Volpi's knowledge of the confidential information had played a key role in the consortium's bid.

"Volpi and Index lacked the credibility and financial heft to lead a private equity investment consortium to acquire Skype unless and until they advertised their knowledge of the Confidential Information," it said.

Volpi was once regarded as a potential CEO candidate at Cisco, and many in Silicon Valley had looked on with worry at his tenure at Joost since June 2007. Although the company was a pioneer in bringing popular TV shows and movies to the Web, it struggled to tie key programing deals and find revenue.

He stepped down from his CEO role in late June, while the company cut jobs and scaled back its services. He initially stayed on as chairman, but was removed from that role days ago and Joost had said it was investigating his actions.

The latest lawsuit also blamed Volpi for burning through a substantial amount of working capital with little success.

"Volpi's overall business strategy failed. Moreover, it was a failure that was extremely expensive, with Joost expending tens of millions of dollars of investors' capital," it said, adding that he, meanwhile, collected confidential information.