Former MySQL leader Mårten Mickos on Thursday urged European Union regulators to approve Oracle's acquisition of Sun Microsystems and its MySQL database group, arguing that further waiting undermines the very competitiveness the EU is trying to protect.
In a letter to Neelie Kroes, the European Commission's commissioner for competition, Mickos said the regulators were correct to question whether Oracle buying Sun and its open-source database software would harm the market. But Mickos, who ran MySQL from 2001 until 2009, believes that the Oracle acquisition won't hurt competition--and that holding the acquisition up will:
"Every new day of uncertainty is potentially very harmful to the various businesses of Sun, reducing competition in the market. A delay in the closing of this transaction is therefore only going to work against the respectable goal that you set out to achieve when launching the probe into this acquisition," Mickos wrote in the letter. (See this separate post with the full text of Mickos' letter to the EU.)
Mårten Mickos, surrounded by inflatable MySQL dolphin mascots.
(Credit: Benchmark Capital)It's not clear what effect Mickos' letter will have on the regulators, but Mickos knows MySQL's business well, and Oracle can use any help it can get in dealing with the acquisition. The U.S. Department of Justice approved the Sun acquisition in August.
Mickos, now entrepreneur in residence at Benchmark Capital, said in an interview that he no longer has anything financially to gain from the transaction. Instead, he's motivated now by trying to help the employees still at Sun--and moreover, its MySQL unit--urging rational discussion about the matter.
"I couldn't live with the fact that I'm not taking action," Mickos said.
Mickos declined Oracle's advances when MySQL was independent, but he agreed to Sun's acquisition in 2008.
In September, the European Commission said MySQL was at the heart of its investigation of the Sun acquisition:
The Commission's preliminary market investigation has shown that the Oracle databases and Sun's MySQL compete directly in many sectors of the database market and that MySQL is widely expected to represent a greater competitive constraint, as it becomes increasingly functional.
The Commission's investigation has also shown that the open-source nature of Sun's MySQL might not eliminate fully the potential for anticompetitive effects. In its in-depth investigation, the Commission will therefore address a number of issues, including Oracle's incentive to further develop MySQL as an open-source database.
Oracle Chief Executive Larry Ellison said MySQL competes in a different part of the database market than Oracle's existing products and that Oracle has no plans to spin MySQL off into a separate company.
Mickos summarized his argument this way:
1. Oracle has as many compelling business reasons to continue the ramp-up of the MySQL business as Sun Microsystems and MySQL previously did, or even more.
2. Even if Oracle, for whatever reason, would have malicious or ignorant intent regarding MySQL (not that I think so), the positive and massive influence MySQL has on the DBMS market cannot be controlled by a single entity--not even by the owner of the MySQL assets. The users of MySQL exert a more powerful influence in the market than the owner does.
MySQL is used to power large-scale Web sites with many servers, a role for which Oracle's back-end database software isn't suited, he argued. It's therefore in Oracle's interest to boost the MySQL business, Mickos said.
As evidence for his case, Mickos pointed to Oracle's 2005 acquisition of InnoDB, whose database engine software is used within MySQL. "Oracle increased their investment in InnoDB since that time, making MySQL a stronger player in the market," he said.
And perhaps reflecting his new role at a venture capital firm, Mickos concluded with a note about the broader effect of the EU's actions:
"If...it becomes difficult or impossible for large companies to acquire open-source assets, then venture investments in open-source companies will slow down, harming the evolution of and innovation in open source, which would result in decreased competition," he said.
Microsoft's top lawyer said that a tentative agreement with Brussels announced earlier Wednesday could potentially allow the software maker to move out of the regulatory crosshairs, perhaps paving the way for regulators to shift their attention elsewhere.
"It's important for us to get closure in Europe on issues that have obviously been controversial for over a decade," General Counsel Brad Smith said in an interview. "Today's decision takes us an important step closer to doing that."
Smith
(Credit: Microsoft)Microsoft initially took a much different approach to the European Commission's assertion that the inclusion of a browser in Windows violated antitrust law. The company had initially proposed just stripping out the browser from Windows 7 entirely, leaving users the prospect of trying to get a browser on their own. The software maker eventually backed down after indications that that approach was unlikely to fly.
While not final, Microsoft's moves would appear to resolve all of its outstanding regulatory issues with the Commission and were greeted warmly by regulators on Wednesday.
Although most of the early attention focused on the agreement around a browser "ballot screen," Microsoft also announced on Wednesday an agreement around product interoperability. Under that deal, a 10-year commitment by Microsoft, the software maker agrees to publish communication protocols and adopt certain standards as part of Windows, Windows Server, Office and other high market share products. Companies could also purchase for 5,000 euros a warranty that would subject Microsoft to court oversight and monetary penalties if it doesn't live up to its commitments.
Smith said that the approach Microsoft took with regard to interoperability was designed to adopt methods that Nellie Kroes, commissioner for competition, had outlined in a speech last year for how companies with high market share products should behave.
"I actually think this in effect implements the model that the Commission has been advocating," Smith said. Moreover, he said it is a model that other software companies should pay attention to, he said, noting that there are lots of companies that have high market share. He noted that Google has 78 percent of the paid search market and IBM has 100 percent of the mainframe market, while Adobe also has dominant positions in certain areas, such as Photoshop.
"It is important we believe to create a level legal and regulatory playing field," Smith said. "Everyone that has a high market share needs to respect the same set of rules. I think a number of these rules are likely to be applicable to other companies and other products."
Settling now with Brussels also could help Microsoft in its effort to win approval for its search deal with Yahoo, Smith said.
"This certainly isn't going to hurt when it comes to the Yahoo-Microsoft agreement," he said. "It's not necessarily going to make a huge difference. We didn't feel a particular step was needed to help it along."
Microsoft is in the process of trying to ascertain whether the deal needs approval from Brussels or from individual European antitrust authorities. It also needs approval from U.S. regulators, who have asked for more information on the deal.
Eolas Technologies, a company that ground through a years-long patent infringement lawsuit against Microsoft, now has sued a large swath of corporate powers for infringement of that same patent and another related patent concerning interactive programs on Web sites.
The list of defendants includes many high-profile companies inside and outside the tech world: Adobe Systems, Amazon, Apple, Blockbuster, Citigroup, eBay, Frito-Lay, Go Daddy, Google, J.C. Penney, JPMorgan Chase, Office Depot, Perot Systems, Playboy Enterprises, Staples, Sun Microsystems, Texas Instruments, Yahoo, and YouTube.
Eolas' suit is not to be taken lightly. Although the earlier Microsoft case took many years to resolve, and Eolas by no means won a complete victory, the patent involved did overall withstand heavy legal challenges despite many on the Web rallying to Microsoft's aid. Microsoft and Eolas won't describe terms of their 2007 settlement of the patent case, but Eolas did say it expected to pay its shareholders a 2007 dividend afterward.
"What distinguishes this case from most patent suits is that so many established companies named as defendants are infringing a patent that has been ruled valid by the Patent Office on three occasions," said Mike McKool, head of the national law firm McKool Smith and Eolas' lead attorney.
This diagram shows one example of the newly granted Eolas patent 7,599,985 in use.
(Credit: Eolas)The U.S. District Court suit, filed in the eastern district of Texas, seeks preliminary and permanent injunctions prohibiting the plaintiffs from using the patented technology; payment for damages from infringement, including treble damages because the alleged infringement was willful; attorney's fees; and a jury trial.
Eolas conducts research and development but also has a separate licensing department. "Eolas seeks to return value to its shareholders by commercializing these technologies through strategic alliances, licensing and spin-offs," the company says of itself.
The earlier Microsoft case involved U.S. patent 5,838,906, "Distributed hypermedia method for automatically invoking external application providing interaction and display of embedded objects within a hypermedia document," which involved browsers launching a helper application such as Adobe Flash.
In the new case, that patent is joined by a newer one granted Tuesday, No., 7,599,985, with a very similar title: "Distributed hypermedia method and system for automatically invoking external application providing interaction and display of embedded objects within a hypermedia document."
"The '985 Patent is a continuation of the '906 patent, and allows Web sites to add fully-interactive embedded applications to their online offerings through the use of plug-in and Ajax (asynchronous JavaScript and XML) Web development techniques," Eolas said in a statement about the lawsuit.
Ajax caught on midway through the decade as a way to endow Web pages with interactive features based in part on the JavaScript programming language. Ajax is used in many Web sites including Google Maps and Yahoo Mail.
The '985 patent, originally filed Aug. 9, 2002, involves a program embedded in a Web page--or "hypermedia document," as the patent language calls it more generally. Here's an excerpt from the patent abstract's description of the technology:
A system allowing user of a browser program on a computer connected to an open distributed hypermedia to access and execute an embedded programming object. The program object is embedded into a hypermedia document much like data objects.
The user may select the program object from the screen. Once selected the program executes on the user's (client's) computer or may execute on a remote server or additional remote computers in a distributed processing arrangement.
After launching the program object, the user is able to interact with the object as the invention provides for ongoing interprocess communication between the application object (program) and the browser program.
And later, in a bit more detail:
The present invention allows a user at a client computer connected to a network to locate, retrieve, and manipulate objects in an interactive way. The invention not only allows the user to use a hypermedia format to locate and retrieve program objects, but also allows the user to interact with an application program located at a remote computer.
Interprocess communication between the hypermedia browser and the embedded application program is ongoing after the program object has been launched. The use is able to use a vast amount of computing power beyond that which is contained in the user's client computer.
Apple, Google, Yahoo, Texas Instruments, and Office Depot each declined to comment on the suit. Staples, Playboy, Sun, Blockbuster, Citigroup, eBay, Frito-Lay, J.C. Penney, JPMorgan Chase, Adobe, and Perot Systems didn't immediately respond to requests for comment.
Elizabeth Driscoll, vice president of public relations for Go Daddy, said in a statement, "We have not seen the lawsuit and, therefore, cannot comment on it. However, we are unaware of the basis for any such claims and we will defend the case vigorously."
Updated 1:26 p.m., 2:09 p.m., 2:35 p.m., and 4:08 p.m. PDT with comment from companies.
Mozilla and Opera are both unhappy with Microsoft's proposed "ballot screen" to let Windows users in Europe select their default browser, according to a report in The Wall Street Journal.
Microsoft's proposed browser ballot screen is its attempt to satisfy the antitrust investigation from the European Union over Internet Explorer's dominance in Windows. The screen would present the user with a menu to install other browsers, including Firefox, Opera, Google Chrome, and Safari, and let the user pick one as the default.
Microsoft became open to the concept over the summer as an alternative to removing IE from Windows for the European market.
At the time, the idea appealed to Opera CEO Hakon Wium Lie, who declared, "It's a happy day for us. We certainly think the ballot is good news and think it will give users a genuine choice." But Mozilla Corp. CEO John Lilly adopted a more wait-and-see approach, saying he wanted to see the specifics before reacting.
EU officials asked rival browser makers among others for their input on Microsoft's proposal, sending them questionnaires over the summer, according to the report.
After checking out the ballot screen and the proposal from Microsoft, the European Union for Interoperable Systems (ECIS), which includes Opera Software ASA as one of its members, said it presents too many hurdles for the average user.
According to Sunday's Wall Street Journal (subscription required), ECIS and Opera attorney Thomas Vinje said that selecting another browser requires "the user to confirm and answer threatening and confusing warnings and questions. Microsoft has cunningly found a way to accept the Commission's suggestion of a ballot screen, but to do so in a way that will be entirely ineffective."
In response to an e-mail from CNET, Vinje said that Microsoft's current ballot screen falls short of having any effect on competition since it fails to offer users a seamless and unbiased choice of browser. However, he felt the problem could be fixed with some trivial changes.
He said that despite choosing an alternate browser through the ballot, Internet Explorer would remain turned on and that only an additional procedure would allow the user to deactivate IE. So the ballot screen is simply installing another browser in addition to IE rather than offering users a choice of a single browser.
Adding an alternative browser is unnecessarily complex, according to Vinje. The ballot screen, set up as a Web page in IE, requires many unnecessary clicks, displays threatening warnings, and poses confusing questions before another browser can be downloaded and set up. He believes users will be discouraged from selecting an alternative browser.
The ECIS feels that a powerful, yet trivial change to Microsoft's proposal is needed: the ballot screen must be designed to offer users a seamless choice in which a single click for an alternative browser is sufficient to download and install that browser, without warnings or questions, and without leaving Internet Explorer active and visible.
"Choosing an alternative browser must not be more cumbersome than choosing Internet Explorer," said Vinje, "which can only be accomplished in a real ballot screen application--not in a Web page."
Countering with suggestions
Mozilla has said that a ballot screen is a good step, but as currently proposed, it's not good enough. A blog written August 18 by Mozilla's general counsel, Harvey Anderson, examined Microsoft's specific language and functionality in the ballot screen proposals. Anderson addressed several concerns and countered with his own suggestions.
Anderson praised Microsoft's effort to not include links or shortcuts to IE inside Office 2007 but said it should be expanded to include all Microsoft software. "If Microsoft applications need to launch a browser, they should only launch the user's default browser," he wrote. "The proposal should be modified such that this provision applies to all Microsoft desktop software, and certainly to the already announced Office 2010."
Anderson also expressed concerns about the ballot screen itself, saying IE could automatically become the default browser in a number of scenarios. It could end up as the default if the user ignores the ballot or can't figure out how to use it. It could also wind up the default if the user runs into problems trying to install one of the other browsers. But in this case, his only suggestion was that the ballot require the user to make a choice.
Finally, Anderson said that the ballot doesn't educate the user as to what a Web browser is or how each browser differs. "The ballot should introduce the user to at least a simple definition of what a browser is before offering the user a choice in browsers," he wrote. "It should probably go one step further and explain that the different browsers compete for superiority in the areas of ease of use, security, and customizability. "
Other voices have chimed in to criticize the ballot screen. Mitchell Baker, chair of the nonprofit Mozilla Foundation, detailed her concerns in a blog on August 17. Despite the user's ability to choose a different default browser, Baker said she believes IE would still have the upper hand with a prominent position on the Windows desktop and Taskbar.
"Choosing another browser as a 'default' does NOT mean that the other browser takes the place of IE," stated Baker in her blog. "For example, the IE logo ("shortcut") still remains unchanged on the desktop. The shortcut/logo of the browser the user has selected does not replace this, it is added elsewhere. As a result, the familiar location remains IE, not the user's choice."
Baker also expressed concern that the average nontechnical user may have trouble navigating the different screens required to choose a different browser. She said she believes the ballot screen only helps users download alternative browsers and should be designed to help them install, open, and make other browsers the default. "As proposed, we expect to see many people who want other browsers get lost in the process before they actually succeed in making an alternative browser their main browsing tool," she wrote.
The EU had hoped to wrap up this final phase of its investigation into IE, especially since all parties have agreed at least in principal to the idea of a ballot screen. But the competition could stall final approval if Microsoft is forced to wrestle with the finer points of the complaints.
Vinje believes that Microsoft only superficially accepted the EU's suggested remedy and that the ballot screen as designed does not restore competition. He said the EU will be careful to make sure that any proposed solution would be effective. And in this case, the ECIS would be surprised if Microsoft's proposal were accepted without "significant modifications."
On Tuesday, Microsoft spokesman Kevin Kutz said: "In July, we made a new proposal to address EU competition law issues related to Internet Explorer and interoperability. The Commission welcomed our proposal and announced it would assess its effectiveness. We continue to look forward to the next steps in this process."
Requests for comments from Opera and Mozilla were not immediately returned.
Update 12:15 p.m. PDT: Added comments from attorney Thomas Vinje.
Everyone in Austin, Texas always seems unusually charming to me.
The people in Starbucks always have time for a chat. And the staff at the wildly gothic Mansion at Judges Hill (which, I am told, used to be a very fine rehab facility) can induce a smile by merely looking at you.
However, it appears that when certain citizens of Austin get behind their computers, they turn into monstrous villains.
This, at least, appears to be the view of Austin Police Chief Art Acevedo. According to the Austin American-Statesman, the chief is considering pursuing commenters on blogs who have either impersonated him or his officers or maligned them beyond the boundaries of legal tolerance.
Options under discussion appear to be not only libel suits, but also criminal charges if the police believe these are warranted.
"A lot of my people feel it is time to take these people on," Acevedo told the Statesman. "They understand the damage to the organization, and quite frankly, when people are willfully misleading and lying, they are pretty much cowards anyway because they are doing so under the cloak of anonymity."
Among the suggestions allegedly implied under this cloak was behavior of an illegal and sexual nature, something the Statesman characterizes as "quid pro quo" arrangements.
The suggestion of lawsuits seems extreme. However, after the "Skanks in NYC" case, in which Google was forced (without trying too hard to fight) to give up the name of a blogger who targeted Vogue model Liskula Cohen, are anonymous bloggers or commenters truly immune from the consequences of their venting?
It so happens that Texas passed a state law on September 1 that specifically targets those who "use another person's name to post messages on a social-networking site without their permission and with the intent to harm, defraud, intimidate or threaten." Such willful behavior is now a third-degree felony.
Is it possible, then, that the Austin police will be the first to test this law out? One can only imagine some commenters' reactions.
MySQL is in safe hands with Oracle, at least according to CEO Larry Ellison.
At an industry gathering in Silicon Valley Monday, the Oracle chief spoke about the legal clouds hovering over the Sun-Oracle deal. Although Sun is losing $100 million a month due to the delay in consummating the merger, he insisted that Oracle will not spin off MySQL just to win approval from the EU.
Interviewed at a Churchill Club event by former Sun and Motorola chief Ed Zander, Ellison maintained that despite EU concerns, Oracle's database does not compete with MySQL.
"MySQL and Oracle do not compete at all," said Ellison. "If you look at where we compete it's with DB2, Microsoft's SQL Server, Sybase, and a long list of others. We never compete against mySQL, it addresses very different markets."
Ellison pointed out that the U.S. Justice Department has already okayed the merger as pro-competition and that once the EU does its job, it will come to the same conclusion. He expressed the need to complete the deal quickly to keep Sun going and to save as many jobs as possible. "The longer this takes, the more money Sun is going to lose," said the CEO.
Ellison also addressed concerns that Oracle might jettison Sun's hardware business.
"We are keeping everything," said Ellison. "We're keeping tape. We're keeping storage. We're keeping x86 technology and SPARC technology--and we're going to increase the investment in it. Sun has fantastic technology. We think it's got great microprocessor technology--it needs a little more investment, but we think it can be extremely competitive."
The Oracle chief laid out his plans for the future of a combined Sun-Oracle. He sees the new entity as not a hardware or software vendor, but as a systems company. As a leading example to follow, he cited the old IBM.
"I would like us to be the successor to IBM," he said. "Not Gerstner's IBM. Not Palmisano's IBM. But when IBM was the dominant software company in the world and translated that to being the dominant systems company."
Now Ellison believes he can successfully compete with IBM. "We think with the combination of Sun technology and Oracle technology we can succeed and beat IBM," he said, "That's our goal."
Ellison also countered the claim that HP and IBM have taken advantage of the regulatory confusion to steal customers from Sun.
"IBM said it's got 250 customers from Sun," Ellison said. "What does that mean? I don't think there's a single example of any customer who replaced all their Sun machines with IBM. Solaris is way better than AIX, and Sun machines are faster than IBM's and they cost less."
How much longer will Ellison extend his 32-year career at the helm of the company he co-founded? "I'll go for five more years and see how it's going," he said.
The $7.4 billion Sun-Oracle merger has been in a holding pattern since the EU opened an in-depth investigation earlier this month. The EU has given itself a deadline of mid-January to render a final decision, potentially putting the deal months behind its original closing date of mid August.
An adviser to the European Union has sided with Google in the company's battle with Louis Vuitton and others over alleged trademark infringement.
The search giant is fighting a lawsuit in the European courts against several companies that claim Google is infringing on their trademarks by allowing advertisers to buy keywords that match those trademarks.
Led by LVMH's Louis Vuitton, the companies are upset that makers of imitation items can buy those keywords through Google's AdWords, allowing their products to pop up in searches alongside the genuine article.
But in a statement released by the European Court of Justice on Tuesday, adviser and Advocate General Poiares Maduro said that "Google has not committed a trademark infringement by allowing advertisers to select, in AdWords, keywords corresponding to trademarks."
Maduro's opinion is that the use of trademarks is limited to the selection of keywords internal to AdWords and as such only concerns Google and its advertisers. When selecting keywords, no product or service is being sold to the public, therefore, neither Google nor its advertisers are infringing on any trademarks, said Maduro.
In response to the concern that makers of imitation products can grab certain keywords, the Advocate General put the responsibility firmly in the hands of consumers.
"The mere display of relevant sites in response to keywords is not enough to establish a risk of confusion on the part of consumers as to the origin of goods or services," said Maduro in the statement. "Internet users are aware that not only the site of the trademark owner will appear as a result of a search in Google's search engine... These users will only make an assessment as to the origin of the goods or services advertised on the basis of the content of the ad and by visiting the advertised sites."
Maduro's opinion doesn't leave Google totally in the clear. Maduro said the company might be liable if found to feature content in AdWords that infringes on a trademark. But even in this case, the trademark owner would have to cite specific instances of damage to their trademarks in order to hold Google accountable.
Trademark issues over AdWords have plagued Google for years, both in the U.S. and especially in Europe where Louis Vuitton and others have taken the company in and out of court. French justice has generally found in favor of the trademark owners, usually ordering Google to pay a fine. But the issue has never been definitively settled.
In response to the latest round of legal squabbles, the French court has asked the European Court of Justice to now settle the issue.
The Advocate General's statement is not binding on the court, but the opinion is strongly considered. The court is now reviewing the case and will render its judgment at a later date.
Former eBay CEO Meg Whitman is expected to officially declare her candidacy for governor of California on Tuesday.
Meg Whitman
(Credit: eBay)Whitman, who has never served an elected public office, will announce her bid for the Republican nomination in 2010 during a speech in Fullerton, Calif. She will reportedly campaign on a platform of cutting state spending by $15 billion and reducing the state's workforce by 17 percent.
Whitman, 53, will become a leading Republican candidate to succeed outgoing Gov. Arnold Schwarzenegger, who will retire because of term limits.
Whitman stepped down as CEO of eBay in March 2008, a decade after she transformed the company from a tiny auction site to an Internet icon. During her tenure, the company's split-adjusted share price leaped from just over $1 to a 2004 peak of almost $60, before plummeting to a recent price of under $14.
In the past year, the billionaire Internet executive has taken a more high-profile role in the Republican Party. Whitman served as an adviser to Republican Sen. John McCain's presidential campaign and endorsed him during a speech at the party's convention in St. Paul, Minn., last year.
Possible primary rivals include State Insurance Commissioner Steve Poizner, a former Silicon Valley exec who founded SnapTrack, a cell phone locating company, and sold it to Qualcomm for $1 billion in January 2000. Another GOP rival is expected to be Tom Campbell, a former U.S. congressman and dean of the business school at University of California at Berkeley.
Likely contenders for the Democratic nomination include Attorney General Jerry Brown, who was already governor 30 years ago, U.S. Sen. Dianne Feinstein, San Francisco Mayor Gavin Newsom, and Los Angeles Mayor Antonio Villaraigosa.
New government rules that support Net neutrality, specifically rules that prevent Internet service providers from selectively blocking sites from their networks, are expected to be unveiled in Washington on Monday, according to a report in the Wall Street Journal.
During a speech on Monday, FCC chairman Julius Genachowski is expected to unveil a new rule that would require all Internet providers--including wireless carriers--to use "reasonable" network-management practices in dealing with Internet traffic, unnamed sources told the WSJ.
The carriers have argued against such rules, noting that not all sites are created equal and that some, with their heavy data usage, are creating network traffic jams. But open-Internet advocates say that Net neutrality rules are years past due. In a statement, Gigi B. Sohn, president of Washington-based Public Knowledge, said:
The Internet was created and grew up under strict non-discrimination rules. Those same ideas are as valuable today as they were 10 years ago. Having rules in place will bring a degree of certainty that will help both carriers and consumers alike. Carriers will know what is allowed and what is not; consumers will be relieved to know they will be able to have access to any content and service on a non-discriminatory basis. We are confident that Net Neutrality rules will not hamper investment, as some critics have charged. Rather, as in the past, they will encourage investment in the kinds of innovation and technology that will help move our economy forward.
The new rule would go before the full commission for a vote next month. The WSJ notes that the three democratic members of the five-person commission support Net neutrality.
This story originally appeared on ZDNet's Between the Lines.
Mike Volpi's battle with his former employer Joost is now headed to court.
Joost announced on Friday that it has filed a lawsuit against Volpi, alleging that the former CEO used trade secrets and other confidential information in a bid to acquire a majority share in Skype from eBay.
The lawsuit comes just days after Joost relieved Volpi of his duties as chairman and a member of the board, saying that it was investigating his actions while he was chairman.
The fracas has its roots in the complicated relationship between online video provider Joost and VoIP provider Skype.
Joost was launched in 2006 by Janus Friis and Niklas Zennstrom, who also co-founded Skype. Volpi met and befriended the pair after serving on Skype's board of directors.
Once considered a contender for CEO at his former company Cisco, Volpi was tapped by Friis and Zennstrom to become CEO of Joost in June of 2007.
After a two-year stint, Volpi left Joost this past July to take a position as a partner at the venture capital firm Index Ventures. This same firm was part of a group that made a deal to buy a 65 percent share of Skype from eBay.
The question of Skype ownership between eBay and Friis and Zennstrom has been a dicey one. Though they sold Skype to eBay in 2006, Friis and Zennstrom kept certain rights via a company they formed called Joltid, and claim they still own the core technology and source code behind Skype. A licensing issue between the two companies triggered a suit that's set to hit a U.K. courtroom next summer. And a separate copyright suit was filed by Joltid this week in Northern California alleging Joltid's technology is being infringed on by Skype users "in the United States at least 100,000 times each day."
Joost's lawsuit filed against both Volpi and Index Ventures alleges that Volpi accessed and used confidential information while at Joost to help his group's bid for Skype. It alleges breach of fiduciary duty against Volpi and Index Ventures, aiding and abetting breach of fiduciary duty against Index, interference with prospective business advantage, misappropriation of trade secrets, breach of contract against Index, breach of confidence, and civil conspiracy.
Joost is looking for an injunction requiring Volpi and Index Ventures to return all confidential documents and files that were allegedly taken from Joost. The suit also is seeking to prevent both defendants from using the alleged misappropriated trade secrets.
Among the specific claims in the suit:
"This action arises out of the acts of a faithless fiduciary, who 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...Using that misappropriated information and in utter disregard for his fiduciary obligations, Volpi, acting in concert with other participants, put together a successful bid for Skype that has shocked the investment community."
"Numerous sophisticated strategic bidders (including, among others, Google and Microsoft) who initially expressed an interest in Skype could not get comfortable proceeding with formal bids. The reluctance of these sophisticated parties is hardly surprising given that intellectual property that is essential to Skype's business currently hangs under a cloud of litigation. Yet somehow the successful bidder, led by Volpi, was able to get comfortable with the enormous risks of proceeding with a 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..."
A phone call placed to Index Ventures for comment was not immediately returned.
Joost was launched more than two years as another portal for online videos but has struggled to gain a foothold in the market against competitors such as YouTube and Hulu.
Note: CBS, which owns CNET News, is investor in Joost.
