That was ugly. This is downright nasty. And now it's a $2 billion mess.
The founders of Skype, the Web communications company currently at the center of a contentious $2 billion tug of war, have filed another suit in their effort to throw a wrench in the works of eBay's (EBAY) attempt to sell the company to a consortium of prominent investors.
Niklas Zennstrom and Janus Friis filed the suit Friday through two companies they control, Joltid Ltd. and Joost N.V., in a Delaware court. The suit charges Mike Volpi, the former chief executive officer of Joost -- which Zennstrom and Friis also founded -- with breaching his fiduciary duty by stealing confidential information in an effort to seal the eBay deal for the consortium.
The suit also names Index Ventures, a member of the consortium trying to buy 65 percent of Skype, as a defendant. Friis and Zennstrom are asking the judge to order the return of documents they claim were "misappropriated" from Joost, and bar the defendants from misusing alleged trade secrets.
Friday's lawsuit alleges that Volpi "has taken advantage of the trust and confidence placed in him to steal confidential, highly proprietary information relating to an extremely popular Internet-based technology, as well as other strategic, commercially valuable and sensitive information, shared with him as a fiduciary."
"Using that misappropriated information and in utter disregard for his fiduciary obligations," the lawsuit continues, "Volpi, acting in concert with other participants, put together a bid for [Skype] that has shocked the investment community."
Volpi recently became a partner at Index Ventures after leaving Joost as the chief executive over the summer, but remaining as chairman of the video start-up. Friis and Zennstrom booted him out of that role last week and have been bad-mouthing him around tech circles. Volpi's role in this drama remains cloudy, but it's clear that Friis and Zennstrom are very cross with him.
"The Skype acquisition could not have occurred with the theft of Plaintiff's confidential information, information that appears to have been utilized in the successful bid for Skype," the lawsuit charges. "In fact, numerous strategic bidders (including, among others, Google and Microsoft) who initially expressed an interest in Skype could not get comfortable proceeding with formal bids."
"Yet somehow, the successful bidder, led by Volpi, was able to get comfortable with the enormous risks of proceeding with the Skype transaction. That comfort level could have been obtained only with knowledge of and an intent to use confidential information that had been misappropriated by Volpi in violation of his fiduciary duties."
This is the second suit Friis and Zennstrom have filed against Volpi this week. On Wednesday, the litigious duo filed a suit in Northern California district court seeking an injunction against Skype, which they founded but later sold to eBay, as well as statutory damages they claim are accruing at an eye-popping rate of "more than $75 million daily."
The earlier lawsuit named eBay, Silver Lake Partners, and Andreessen Horowitz, the investment firm of Marc Andreessen, the billionaire co-founder of Netscape, among other defendants.
Andreessen has not returned multiple requests for comment and a spokesman for Silver Lake has declined to comment. A spokesman for eBay said the charges "are without merit and are founded on fundamental legal and factual errors," adding, "We remain on track to close the transaction in the fourth quarter of 2009."
That is looking increasingly unlikely.
Zennstrom and Friis had maintained a copyright claim to Skype's peer-to-peer calling technology even after they sold the company to eBay in 2005. The pair terminated a license for the technology in March and the two companies are currently squaring off in litigation in the United Kingdom -- a matter which is expected to go to trial next year.
Zennstrom and Friis have a reputation for being highly litigious, so perhaps they'll file another lawsuit against Skype's would-be buyers. They're both billionaires, so they can afford the legal fees.
Introduction to Value Investing
Are you the next Warren Buffett?View Course »