Skype Founders Didn't Out-Negotiate, They Did Themselves In

(MoneyWatch)  Sometimes you see a trick of negotiation that is so slick you have to sit back and applaud. And then, sometimes, you later hear about a fact previously unknown to you that makes you realize you had much of the situation wrong. And that's what I'm hear to say: I was wrong. The founders of Skype weren't quite as clever in their negotiations during eBay's quest to dump the VoIP company as I thought. Instead, they got screwed by their own contract.

I came across this tidbit from IPKat, which covers IP news in the U.K. but had missed posting something about this until now. A court decision in the Chancery Division for England and Wales held that Joltid, which was trying to terminate the license for technology critical to Skype's operation, could not do so under the contract it had signed.

In short, the contract between Joltid, which is owned by Skype's founders, and Skype assumed a U.K. jurisdiction. Joltid brought its copyright claims in the U.S., pulling an inverse of what the legal world often sees, with plaintiffs seeking sympathetic libel laws in the U.K. It hoped to put pressure on Skype, eBay, and the investors who wanted to purchase Skype. Skype asked the U.K. court for an "anti-suit injunction to restrain any further steps being taken against it in the US, plus discontinuance of those proceedings themselves," as IPKat put it. The court's view? "Since the validity of the licence agreement was not in dispute, even if it had been terminated the US proceedings were themselves a breach of contract."

Joltid was now legally stymied. It could continue pressure in U.S. courts, which are not beholding to other nations, but would be flummoxed in Europe, and clearly Skype could run its operations anywhere on the planet. So the final deal was likely a practical compromise among the parties, because none of them wanted the insecurity accompanying the legal wrangling. Skype founders Niklas Zennström and Janus Friis got something, but probably not what they wanted, because they didn't have the legal grounds to halt everything. And after the money they made on selling Skype to eBay in the first place, you have to wonder whether they couldn't have found a more profitable way to spend their time.

Image via stock.xchng user Ambrozjo, site standard license.