Skype wins victory in US$4b lawsuit

A US court has thrown out a US$4.1 billion lawsuit that was levelled against Skype.

Streamcast Networks, a P2P software vendor, told a Los Angeles court that Skype's owners, Niklas Zennström and Janus Friis, had illegally taken Streamcast's VoIP technology and used it to create their VoIP company.

Skype has gone on to be one of the world's most successful internet companies, with Zennström and Friis selling it to eBay for US$2.6 billion two years ago.

Streamcast develops and distributes P2P software known as Morpheus, and it has long maintained that it owns the rights to the FastTrack/Kazaa software engine on which Morpheus is based.

The court case -- which saw Streamcast claiming US$4.1 billion in unspecified damages plus a court order blocking eBay from selling Skype's services -- revolved around the involvement of the Skype pair and a long list of other defendants in the development of both Kazaa and VoIP software. Zennström and Friis were active in developing Kazaa shortly after the end of the dot-com boom.

But the federal judge has now rejected the lawsuit, decreeing that Streamcast had failed to prove its case. The judge dismissed all claims against both Skype and all the other defendants.

The case began in March 2006, when Streamcast accused the defendants of a breach of RICO (the Racketeer Influenced and Corrupt Organizations Act).

Richard Thurston reported for ZDNet UK from London