The fight for Skype has ended. After weeks of nasty legal sparring, the Internet telephony service’s founders agreed to join the investor group purchasing it from EBay (EBAY) and dropped the lawsuit that had threatened to bollocks the deal.

“Skype will be well positioned to move forward under new owners with ownership and control over its core technology,” said eBay chief executive John Donahoe in a statement. “We look forward to closing the deal and focusing on growing our core e-commerce and payments businesses.”

Under the terms of the agreement, Skype founders Niklas Zennström and Janus Friis will take a 14 percent stake in the company they founded and then sold to eBay, which will include an investment by them.

BoomTown’s Kara Swisher reported yesterday that the total was 13 percent–10 percent for the rights to key Skype technology held by the founders and the option to invest $83 million for three percent more.

In exchange, the pair will give Skype software essential to its operation and drop their various lawsuits against eBay and Skype buyers.

Interestingly, Index Ventures, which helped orchestrate the deal, is leaving the consortium of investors taking a majority stake in the company–as BoomTown reported earlier this week. Index partner Michelangelo Volpi, a former employee of Skype’s founders, had been at the center of one the suits that threatened to ruin the deal. Said Index partner Danny Rimer: “The deal terms changed for Index such that it no longer matches our investment criteria and thus we have decided not to participate in the transaction.”

PREVIOUSLY:

• Volpi and Index Ventures Out of Skype Deal, the Lawsuit-Happy Founder Twins In
• I Love the Smell of Settlement in the Morning: Skype Founders Set to Get 10 Percent, Option to Buy Three Percent More and Two Board Seats
• Volpi and Index Smack Back at Skype Founders With Motion to Dismiss (Plus Filings!)
• When Entrepreneurs Attack! All 10 New Skype Lawsuit Filings!
• Dueling Skype Sides Hire Big Communications Guns
• Skype Actually a “Voice Over IP Litigation” Service

According to sources close to the situation, Index Ventures and Michelangelo Volpi are out of the deal to buy Skype–and their lawsuit-loving nemeses, the founders of the Internet telephony service, are in.

Skype founders Niklas Zennström and Janus Friis had sued Index and partner Michelangelo Volpi via tech companies they control, Joltid and Joost.

The pair had already been in a legal battle over software licensing issues with eBay (EBAY), the company that had sold Skype to in 2005.

They then accused Index and Volpi, employing a reputation-bashing style, of using confidential information as part of a consortium bid to acquire a large chunk of Skype.

Volpi had been Joost’s CEO.

Volpi and Index fired back in court filings and both sides armed themselves with powerful PR guns.

Ironically, Index was only a small part of the group that won the deal to acquire Skype from eBay recently.

News of the serious settlement talks was reported earlier this week by GigaOm’s Om Malik.

The New York Times’s Brad Stone also added significantly to the story about the settlement today, noting the Skype founders would be getting a stake and that Index “is most likely withdrawing from the deal.”

Well, most likely now means certainly for Index, sources told me, and the London-based venture firm that bid for Skype has to bid that deal goodbye.

More details to come, but it’s sure proof that the legal system, such as it was used, works.

The legal high jinks in the contentious battle over the fate of Skype got worse this afternoon, as former Joost CEO Michelangelo Volpi and Index Ventures filed a motion to dismiss a lawsuit brought by the founders of Skype–Niklas Zennström and Janus Friis, via Joost and Joltid–against them.

It’s yet another chess move among a group of well-known tech players, who used to work together closely and are now at odds.

In a filing in the U.S. District Court in Delaware, Volpi and the London-based Index–where Volpi now works–noted, referring to a bid Zennström and Friis made to regain control of Skype, which they sold to eBay (EBAY) years ago:

“Instead of accepting the fact that their bid failed in the marketplace, Friis and Zennström are now using inflammatory and highly-charged litigation–through companies that have no relationship to the Skype purchase–to try to achieve their personal business goals.”

A spokesman for Joost and Joltid did not agree with Volpi’s assessment:

“Mr. Volpi’s latest motion appears to have been prepared prior to Defendants receiving Plaintiffs’ Motion for Preliminary Injunction, which is filled with evidence supporting Plaintiffs’ claims. In light of this strong showing of substantive evidence, much of it from Mr. Volpi’s own correspondence, there is no basis for Mr. Volpi’s assertion that Plaintiffs have somehow failed to state a claim upon which relief can be granted.”

Index was a small player within a group that won Skype, putting in $75 million, in a $2 billion deal that is set to close in the next few weeks.

The motion to dismiss the filing is not surprising given that Joost and Joltid filed a motion for preliminary injunction against Volpi and Index yesterday.

They are asking that he not use knowledge or confidential information he got at the video start-up in current dealings with Skype.

To complicate things further, the innovative and entrepreneurial pair also own a company called Joltid, which has licensed key technology for Skype to eBay.

Joltid and eBay have already been fighting in court over that agreement, bickering back and forth about whether eBay violated the terms of that deal or not.

Via Joltid, Zennström and Friis also filed suit again against Skype and its owner, eBay, for copyright violations in the U.S.

For good measure, they added the winning buyout group, including Index, Silver Lake Partners, Andreessen Horowitz and the Canada Pension Plan Investment Board.

And both Joltid and Joost have also sued Volpi personally, as well as Index, making serious allegations about his behavior as Joost CEO.

Here are several key legal filings to peruse, for all you “Law & Order” types:

Motion to Dismiss _00302105_ –

Opposition to Motion For Expedition _00302104_ –

Volpi Opening Brief 10.15.09 _00302101_ –

Perhaps the sides in the ever-escalating war over the Skype deal will work out their differences and settle–which is what should and probably will eventually happen after everyone realizes how stupid all this noisy legal wrangling over the Internet telephony giant is.

But that day is decidedly not today, given a pair of recent PR hires by parties involved.

The founders of Skype, via the two tech companies they control, Joost and Joltid, have hired Sitrick & Company, headquartered in Los Angeles, while Index Ventures has tapped Joele Frank, Wilkinson Brimmer Katcher, based in New York.

Both strategic communications and public relations firms are well known for employing some very sharp elbows and extremely tough talk when it is time for some creative corporate crisis management.

And both are familiar with tech issues, having worked on contentious issues related to companies such as Microsoft (MSFT), Yahoo (YHOO), CBS (CBS) online unit CNET, and others.

And there is plenty of bad blood to work with here.

Yesterday, in yet another legal volley, Joost and Joltid filed a motion for preliminary injunction against former Joost CEO Michelangelo Volpi and Index Ventures, where Volpi now works as a partner.

They are asking that he not use knowledge or confidential information he got at the video start-up in current dealings with Skype.

Legal attacks have become the negotiating tool of choice from the founders of Skype, Niklas Zennström and Janus Friis, who were on the losing side of the $2 billion deal to buy the Internet telephony giant from eBay (EBAY).

Volpi is now a partner at London-based Index, which was one of the smaller players on the winning side of the bid, putting up $75 million.

To complicate things further, the innovative and entrepreneurial pair also own a company called Joltid, which has licensed key technology for Skype to eBay.

Joltid and eBay have already been fighting in court over that agreement, bickering back and forth about whether eBay violated the terms of that deal or not.

Via Joltid, Zennström and Friis also filed suit again against Skype and its owner, eBay, for copyright violations in the U.S.

For good measure, they added the winning buyout group, including Index, Silver Lake Partners, Andreessen Horowitz and the Canada Pension Plan Investment Board.

And both Joltid and Joost have also sued Volpi personally, as well as Index, making serious allegations about his behavior as Joost CEO.

This kind of mud-slinging could get even worse with the hiring of big PR firms.

Along with Frank and Sitrick, by the way, Silver Lake–which is the big player on the winning side–has hired Edelman’s crisis and issues management team.

Interestingly, several sources said, the various players have also been engaged in settlement talks, even as the lawsuits have piled up.

Coming to some agreement is clearly the best outcome, although it does not appear that the spate of lawsuits has yet derailed the eBay deal with the Silver Lake-led group, which could even close in the next several weeks.

“Everyone should be thinking ahead of the headlights,” said one source. “But right now, it seems to be all about emotions.”

Earlier today, Joost and Joltid attacked!

The pair of companies, which are controlled by Skype co-founders Niklas Zennström and Janus Friis, filed a motion for preliminary injunction against former Joost CEO Michelangelo Volpi and Index Ventures, where Volpi now works as a partner, asking that he not use knowledge or confidential information he got at the video start-up in current dealings with Skype.

It’s the latest volley in an ever-escalating battle over the Internet telephony giant, which also involves eBay (EBAY).

As a public service to all readers who really have nothing else to do, here are the 10 filings related to this latest legal maneuver:

PI Brief – PUBLIC –

Motion To Expedite –

Motion To File Under Seal –

Proposed Order To Expedite –

Proposed Order To File Under Seal –

Exhibits 1-20 to Declaration of S. Dargitz In Support of PI – PUBLIC –

Declaration of S. Dargitz In Support of PI – PUBLIC –

Declaration of Justin Erenkrantz In Support of PI –

Declaration of Janus Friis Degnbol In Support of PI –

Declaration of Owen O’Donnell In Support of PI –

Joost and Joltid filed a motion for preliminary injunction against former Joost CEO Michelangelo Volpi and Index Ventures, where Volpi now works as a partner, asking that he not use knowledge or confidential information he got at the video start-up in current dealings with Skype.

The move is yet another legal attack from the founders of Skype, who were on the losing side of the $2 billion deal to buy the Internet telephony giant from eBay (EBAY).

Opening the “Memorandum of Points and Authorities in Support of Plaintiff’s Motion for Preliminary Injunction,” which is shown below and is full of tough allegations about Volpi’s misbehavior:

“This action arises out of the acts of a faithless fiduciary, defendant Michelangelo Volpi, who, despite being the chief executive and Chairman of Joost, embarked on a systematic scheme to breach his fiduciary duties and promote his own self-aggrandizing campaign to become the next chairman of internet telephony leader Skype Inc.”

Volpi, who declined comment for now, was CEO of Joost, arriving at the much-hyped online video start-up to great fanfare in mid-2007.

But the London-based Joost never quite caught fire and began layoffs and contraction this summer.

As part of that development, Volpi then went to Index Ventures, a venture firm also based in London.

And, in one of Volpi’s first deals, Index was one of the smaller players on the winning side of the bid to buy Skype, putting up $75 million.

But also vying for the prize were the Internet telephony service’s founders, Niklas Zennström and Janus Friis, who had hooked up with a group of private equity investors.

To complicate things further, the innovative and entrepreneurial pair also own a company called Joltid, which has licensed key technology for Skype to eBay.

Joltid and eBay have been fighting in court over that agreement, bickering back and forth about whether eBay violated the terms of that deal or not.

Via Joltid, Zennström and Friis also filed suit again against Skype and its owner, eBay, for copyright violations in the U.S.

For good measure, they also added the winning buyout group, including Index, Silver Lake Partners, Andreessen Horowitz and the Canada Pension Plan Investment Board.

And both Joltid and Joost–aka Zennström and Friis–also sued Volpi personally, as well as Index again.

They allege tech skullduggery on Volpi’s part, in which he used confidential information he learned at Joost to thwart Joltid.

UPDATE: Here is the press release, with the official filing below:

Joost and Joltid File Motion for Preliminary Injunction Against Michelangelo Volpi

And Index Ventures Management, Seeking to Prevent Their Use of Confidential Information In Connection With the Acquisition or Management of Skype

Wilmington, DE (Oct. 14, 2009)–Joost US, Inc., its indirect parent company Joost N.V., and Joltid Limited today filed a Motion for Preliminary Injunction against Michelangelo Volpi and Index Ventures Management in the United States District Court for the District of Delaware. In support of the Motion, the plaintiffs also filed a Memorandum of Points and Authorities containing facts and legal arguments, witness declarations and other evidence.

The Motion for Preliminary Injunction asks the Court to enjoin Index and Volpi from using any of Joost’s and Joltid’s confidential information regarding (among other things) the Global Index Software, the technology developed and owned by Joltid that provides the peer-to-peer capability embedded in the Skype program. The Motion also asks the Court to enjoin the defendants from: (i) using the confidential information in connection with the operation or strategic planning of Skype; (ii) communicating such information to other parties in the “Buyout Group” that has made a bid to acquire Skype from eBay Inc.; (iii) soliciting employees of Joost and Joltid with offers to join Skype; (iv) having communications with current or former employees of Joost or Joltid regarding the companies’ confidential information; and (v) further participating in the Skype acquisition or assuming any position with Skype until a final adjudication of the merits of the case.

The Motion for Preliminary Injunction, Memorandum of Points and Authorities, and supporting declarations are available on the internet at https://www.lexisnexis.com/fileandserve. The case name is Joost US Inc. et al v. Volpi et al and the Case Number is 1:09-cv-708.

The plaintiffs filed a lawsuit against the defendants on September 18, 2009, alleging breach of fiduciary duty against Volpi, 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. The Motion for Preliminary Injunction seeks interim relief until the lawsuit can be completed.

And here is the key filing, one of 10 in the case:

PI Brief – PUBLIC –

Revenge is a dish best served cold–except, of course, when one decides to serve it piping hot.

And that’s just what part of one of the losing sides of the $2 billion deal to buy Skype from eBay (EBAY) is doing in an unusual attack on Michelangelo Volpi, a well-known tech exec in Silicon Valley.

You see, until recently, Volpi was CEO of Joost, arriving at the much-hyped online video start-up to great fanfare in mid-2007.

But the London-based Joost never quite caught fire and began layoffs and contraction this summer.

As part of that development, Volpi then went to Index Ventures, a venture firm also based in London.

And, in one of Volpi’s first deals, Index was one of the smaller players on the winning side of the deal to buy Skype, putting up $75 million.

But also vying for the prize were the Internet telephony service’s founders, Niklas Zennström and Janus Friis, who had hooked up with a group of private equity investors.

To complicate things further, the innovative and entrepreneurial pair also own a company called Joltid, which has licensed key technology for Skype to eBay.

It gets better! Joltid and eBay have been fighting in court over that agreement, bickering back and forth about whether eBay violated the terms of that deal or not.

Finally, in the past few days, in what is obviously a related move, Joost said that it had dumped Volpi as a director and as chairman, a job he had retained when he left for Index in July.

Said the company in a statement:

“Mr. Volpi was removed from the board of directors and from his position as chairman of Joost by shareholder vote. The company and its board of directors is conducting an investigation into Mr. Volpi’s actions during his tenure as CEO and as chairman.”

Volpi had no comment.

BoomTown does: It looks like a lame attempt at kneecapping him to me, as part of a larger rumble!

But, for many, this comes as a surprise, since it had been thought that Volpi–a former dealmaker with Cisco (CSCO)–would play the role of a peacemaker in the eBay-Joltid fighting.

Actually, according to numerous sources, Volpi had also struggled with Zennström and Friis when he ran Joost, and there is no love lost among them.

In fact, here’s a glimpse of that tension in a video interview BoomTown did with Volpi a year ago in London, when I visited its office there.

It took place just after Joost was forced to rejigger itself to gain momentum (which never happened).

“Restarting a start-up is definitely not easy,” said Volpi in the interview.

As it turned out, that was the least of his worries.

Here’s the video:

On Friday, Joost, the U.K. Internet video company, said that by shareholder vote it had removed Michelangelo Volpi from its board of directors and from his position as chairman of the company. Volpi, a former high-level Cisco (CSCO) executive, stepped down from Joost’s CEO position in July, and is now a general partner at investment firm Index Ventures. Joost in a statement said it was also “conducting an investigation into Mr. Volpi’s actions during his tenure as CEO and as Chairman.”

In his role at Index, Volpi helped organize the group of investors that’s buying Skype from eBay. Yet Volpi’s relationship with Joost could prove important to the Skype deal coming to a clean conclusion.

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