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.
Former Joost CEO Mike Volpi has been stripped of his post as chairman and removed from the board by a shareholder vote, the online video service confirmed Saturday. Joost also said it is investigating Volpi's actions during his time as chairman and chief executive.
Joost was co-founded by Janus Friis and Niklas Zennstrom, who also co-founded Internet phone company Skype. Volpi left Joost as CEO a few months ago, taking a position in July as a partner at Index Ventures, a global venture capital firm. Index Ventures is part of the consortium that earlier this month signed a deal with eBay to acquire a 65 percent stake in Skype, with eBay retaining 35 percent.
Reports earlier this year cited sources saying that Friis and Zennstrom were attempting to put together a bid of their own to buy back Skype.
Former Joost CEO Mike Volpi has been removed from the company's board.
(Credit: CNET TV)"Mr. Volpi was removed from the board of directors and from his position as chairman of Joost by shareholder vote," a London-based spokesman for Joost said in a statement. "The company and its board of directors is conducting an investigation into Mr. Volpi's actions during his tenure as CEO and as chairman."
CNET News sent an e-mail to Volpi requesting a comment. Volpi told Reuters on Saturday, "I am no longer associated with Joost."
A story in the U.K.'s Times said the investigation is believed to be about intellectual property issues.
Friis and Zennstrom's relationship with eBay concerning Skype hasn't been exactly rosy. In 2006, eBay bought Skype for $2.6 billion, but Skype's co-founders retained the rights to some of the service's technology via a company they formed called Joltid. In a licensing dispute, Joltid said it might take back some of the technology. eBay is suing Joltid to keep it from doing so, but the case isn't set to go to trial until June 2010. In July, eBay said it was building new software to run Skype.
So how does all this affect the sale of Skype?
A Wall Street Journal story Friday noted that in eBay's SEC filing regarding the sale of Skype, it "said consummation of the deal was subject to 'no settlement of the pending litigation with Joltid Limited having been effected without the consent of the Buyer (subject to certain limitations).'"
Launched a few years ago, Joost was once a competitor of YouTube and Hulu. In June, however, CNET News reported that Joost was getting rid of its consumer service and instead would put its efforts into building "white label" video platforms for "cable and satellite providers, broadcasters and video aggregators."
Before joining Joost in June 2007 as CEO, Volpi was on the board of Skype and spent 13 years at Cisco Systems.
Joost may be in for more bad news, as a report out of Great Britain says Mike Volpi, CEO of the video site, is a candidate to take over as chief executive of ITV.
Joost CEO Mike Volpi is on the short list of candidates for the chief executive job at ITV, according to a report.
(Credit: CNETTV)ITV is a British public service network and a BBC competitor. British newspaper The Sunday Times reported that Volpi is among a small group of candidates scheduled to be interviewed over the next two weeks.
The report comes two months after CNET News reported that Joost was shopping itself to cable companies. One of the companies that made inquiries was Time Warner. Joost, created by the founders of Skype and Kazaa, has failed to live up to its early hype and has steadily fallen behind Web video plays, such as YouTube and Hulu.
Joost representatives were not immediately available for comment.
Before joining Joost two years ago, Volpi was a senior executive at Cisco. If he is indeed a candidate, he's up against Malcolm Wall, former boss of Virgin Media's channels arm, and Guillaume de Posch, a Belgian who ran the German broadcaster Prosiebensat.1, according to the Times' report.
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