Skype shutdown flagged over licence dispute

Auction site eBay could be forced to close Skype if it can't renew a licence for peer-to-peer communication technology that underpins the popular internet phone service.

The auction giant said in a US Securities and Exchange Commission filing that a licensing dispute with Joltid had the potential to "severely and adversely" affect Skype.

Joltid was founded in 2001 "by the team who created Kazaa", the company's website said. One of that team is Niklas Zennstrom, who co-founded Skype, Kazaa and Joost.

Its "flagship product" is called Global Index which it says enables "peer-to-peer voice, video and chat communications" for Skype.

eBay has licenced it from Joltid since it bought Skype in September, 2005.

But according to the eBay filing, Joltid sought to terminate the agreement.

A trial is set for next June.

Although it was "confident" of its legal position, eBay said Skype was preparing for an "adverse result" by developing its own peer-to-peer software to replace Joltid.

"However, such software development may not be successful, may result in loss of functionality or customers even if successful, and will in any event be expensive," eBay said.

"If Skype was to lose the right to use the Joltid software as the result of the litigation, and if alternative software was not available, Skype would be severely and adversely affected and the continued operation of Skype's business as currently conducted would likely not be possible."

Skype has 480 million users worldwide, according to the readwriteweb blog.