Intrigue and mystery envelope the legal battle between Joltid Ltd on one side and the current and would-be owners of Skype on the other. We know that the parties are in conflict, and that the stakes are high, but how much do we know beyond that?
I will do my best here to shed new light on the situation. First, let’s understand the context. When that’s done, I will present new information that suggests Joltid is well placed to get what it wants. I presume what it wants is full or partial ownership of Skype.
Joltid filed a lawsuit in U.S. District Court in Northern California on Wednesday. The suit alleges that eBay, Skype’s current owner, and Skype’s new investors — Index Ventures, Silver Lake Partners, Andreessen & Horowitz, and the Canada Pension Plan Investment Board – are in violation of copyright law. Owned by Skype founders Janus Friis and Niklas Zennstrom, Joltid seeks damages of more than $75 million for each day that Skype operates.
eBay says the Joltid lawsuit and the claims it contains are without merit. eBay also says it is developing software that eventually will replace the Joltid code. I have learned that might not be possible.
To understand why, one has to delve into a bit of history. Let’s start with Zennstrom and Friis, peer-to-peer impresarios who have launched a succession of varyingly successful companies in their eventful careers.
They started with software called FastTrack, which was used as the foundation for KaZaA, a P2P file-sharing company that gave the music industry fits.
After KaZaA, Zennstrom and Friis applied the same P2P principles and much of the same software foundation to web-based VoIP. That’s how Skype was born.
From there, after eBay acquired Skype in 2006, the duo of Zennstrom and Friis founded video-sharing company Joost, which eventually attracted Cisco wheeler-dealer Michael Volpi, who served as its CEO and chairman until a short time ago. The Joost joust is another bone of contention in the Skype soap opera; it seems intensely personal, and I do not pretend to fully comprehend the underlying dynamics.
It’s hugely significant that eBay did not procure Joltid’s key P2P software assets when it acquired Skype. In light of what I will disclose, that oversight turned out to be an error more egregious than most people realize. Its consequences extend beyond the current sequence of litigation, which began earlier this year, in the UK, when Skype filed a claim against Joltid.
This is where I have some new information to offer. I corresponded by email earlier this evening with Julian Cain, a software engineer who worked on KaZaA and also is familiar with Joltid, bluemoon, and Skype. I contacted Cain because I was intrigued by a comment he made earlier this year in reply to a blog post from Tom Keating at TMCnet.
Specifically, I asked Cain whether Zennstrom and Joltid had the capability to technically bring down the Skype network. From what he had said earlier this year, and from what I’d read in a Fortune article by Roger Parloff of many years ago – which described how KaZaA brought down P2P file-sharing networks (Grokster and Morpheus) it accused of software-licensing transgressions – I had a suspicion that Joltid was more than technically capable of playing Skype saboteur.
Here’s what Cain wrote in reply to my message:
Ebay, Inc. and Joltid, Inc. are keeping a lid on the infraction. Nobody is reporting anything because they do not know the details. In fact, they (Joltid) were here in the USA last week in California, but have since departed.
But to answer your question (about whether Skype could be brought down remotely by Joltid), yes, they have the technical ability to revoke the rights of the SkyLib (a cross-platform library written in C++ that underlies the functionality of Skype on all client platforms) remotely. Joltid CAN inject algorithms into the SkyLib ad-hoc overlay network remotely. What they did with Grokster was not advanced and also didn’t use cryptographically secure methods, as they were home rolled. SkyLib does, however, use a proper PKI.
The question you must ask yourself is this: Did Joltid, Inc. hand over their Root Certificates with the acquisition of the Skype Client? No, they did not.
This is a political agenda and not what you might think.
What Cain told me in the above email is similar to the comment he contributed to a blog post by Tom Keating over at TMCnet. Here are excerpted remarks from that comment:
The FastTrack p2p library has built in code functions to disable encryption, much like revoking a signed key, just using really bad crypto code. The end result is an inoperable p2p library.
Skype wasn’t built directly from the FastTrack p2p stack, it is another source tree/ project and uses PKI properly instead of home-grown crypto code.
Joost wasn’t built from the FastTrack nor Skype source tree; it, too, is another project.
So what we have here is very simple, Joltid doesn’t and never has sold their p2p code to anyone, ever. I tried to make this public to ebay at the time of acquisition but as the first poster said it was a “rushed decision” so nobody cared.
This is a trend with Zennstrom and it is how he wins every time.
Lastly, I personally believe that they can take Skype off the Internet remotely as they did to Grokster, and since they did it to a very large audience I don’t see why this case is any different from the first.
Conclusion: Buyer beware and don’t lease software that can be disabled remotely by the vendor. Also, never purchase or lease software that is self encrypted, compressed or obfuscated because it’s not intellectual property that is being hidden, it’s always something else, and I say this because I can circumvent their “binary protection” code and what I have seen is nothing short of scary.
In subsequent correspondence I had with Cain, pertaining to whether eBay can build its own software to replace the code it licensed from Joltid, he wrote the following:
“Ebay, Inc. is not building their own technology to replace SkyLib as it’s a technical impossibility without starting over again from GUI to guts.”
If what Cain says is accurate, Zennstrom and company have the current and aspiring owners of Skype in more than just a legal bind. Some sort of accommodation will have to be reached, or Skype could be taken offline, either technically or in court.
To put it mildly, that would be an undesirable outcome for all involved.