Skype latest victim of patent suit

Stan Beer
Saturday, 03 June 2006 15:37

IT Industry - Strategy

Newark-based internet telephony company, Net2Phone has taken on eBay and its subsidiary peer-to-peer VoIP provider Skype in a lawsuit, alleging that Skype has infringed its patent for the placing of calls over the net.

The law suit, filed in the US District court of Newark, alleges that Skype infringed a patent filed by Net2Phone under US Patent Class 704, which broadly covers data processing encompassing speech signal processing, linguisitics, language translation, and audio compression/decompression.

Like other law suits filed recently against big name companies with deep pockets, the Net2Phone suit is going for broke, seeking damages and an injunction against further infringement, which would basically mean shutting the Skype service down.

Skype, which has more than 100 million users around the world, was acquired by eBay in 2005 for between US$2.6 billion and US$4.1 billion, depending on performance milestones being reached. Its service enables users to place computer to computer calls for free and has a paid service called SkypeOut, which enables users to place calls to telephone landlines for a cheap timed rate of typically 1.5 euro cents a minute. The company, which was founded in Luxemborg, has a very strong European user base but has yet to gain traction in the US.

It is a fair bet, however, that Skype has ruffled more than few feathers among US VoIP providers last month. In an effort to build its US base, Skype announced that it would enable North American users of its SkypeOut computer-based telephony service to place free calls to US and Canadian telephone land lines and mobile phones until at least the end of 2006.