Morpheus P2P Creators Sue eBay

The creators of the peer-to-peer network Morpheus sued eBay earlier this week, claiming its Skype division broke an agreement that gave StreamCast Networks first right of sale to the FastTrack network protocol. The technology is the foundation of Skype's Internet calling, and was used for file sharing in Morpheus.

StreamCast first filed the suit in January, but Monday's filing adds eBay as a defendant. The company is asking for $4 billion in damages and an injunction that would stop the distribution of Skype VoIP.

Skype founders Niklas Zennstrom and Janus Friis are also accused or racketeering in the suit, by misappropriating assets and customers that belonged to StreamCast, as well as transferring rights to the FastTrack technology in secret.

"We are taking action because we believe the rights to the Skype and FastTrack technologies were swept out from under our feet, and our 28 million Morpheus users were stolen from us," said Michael Weiss, CEO of StreamCast Networks. "The real story needs to be told."

The spat between the two companies began in February 2002 when Morpheus users were suddenly denied access to FastTrack due to licensing disputes. The issues caused Morpheus to find a new way of supporting its network.

Company executives say StreamCast played a big part in the technology's development, and held rights to guarantee the sale of FastTrack to the company.

"The sale of Skype to eBay was made possible through a scheme by many of the defendants to misappropriate the FastTrack peer-to-peer technology that rightfully belongs to StreamCast," added outside counsel Dan Woods of the law firm White & Case. "We've now added eBay as a defendant to this lawsuit."

eBay has thus far refused comment on the matter.