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Morpheus makers file suit against eBay

StreamCast Networks includes online auctioneer to list of defendants that includes Kazaa and Skype.

StreamCast Networks, the creators of the Morpheus file-sharing software, is alleging in a lawsuit that auction house eBay is profiting from peer-to-peer technology that rightfully belongs to it.

StreamCast claims in a lawsuit filed Monday in the U.S. Central District Court in Los Angeles that Niklas Zennstrom and Janus Friis, the duo who developed the technology behind companies Kazaa and Skype, of breaking an agreement to give StreamCast the first right to purchase their FastTrack peer-to-peer protocol.

FastTrack was the network on which Morpheus' file-sharing application once operated and is also the technology foundation of Skype's voice over Internet Protocol (VoIP) service.

Monday's filing is an amendment of a suit first filed in January. The complaint now adds eBay to the 21 companies previously named as defendants and requests that the court force Skype, acquired by eBay last October, to halt sales of VoIP products. StreamCast is also asking for more than $4 billion in damages.

A spokeswoman for eBay declined to comment on the lawsuit.

StreamCast has accused Zennstrom and Friis of racketeering and has added new claims, accusing all defendants--other than eBay--of antitrust violations, said Matthew Neco, StreamCast's general counsel.

The FastTrack network once supported Morpheus' file-sharing application. On Feb. 26, 2002, the deal ended suddenly when Morpheus users were locked out of FastTrack following a licensing dispute. Morpheus was once the most popular way to share MP3 files over the Internet.

Up until the dispute, the companies had a close working relationship, said Michael Weiss, StreamCast's chief executive.

Weiss said that StreamCast played a big part in developing FastTrack and that the company had paid to guarantee the right to acquire FastTrack. Then Zennstrom made plans in secret to ignore the deal and sold the technology to a shell company, according to the lawsuit.

"FastTrack, which Skype has been founded on, was built through a collaboration of (the two companies)," Weiss said in an interview with CNET "We absolutely would have paid them the fair market value and would have met and exceeded other offers for the technology."