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Skype Founders Pay Out For Kazaa Settlement

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http://www.usatoday.com/tech/news/2006-07-27-skype-kazaa-settlement_x.htmLONDON ? Niklas Zennstrom and Janus Friis, the billionaire Internet entrepreneurs who created Kazaa and Skype, have reached into their own pockets to help settle a lawsuit brought by the music and movie industries.
Australia's Sharman Networks, the lead defendant in a lawsuit by the movie and music industries which was settled on Thursday, confirmed that Zennstrom and Friis contributed to a payout of well above $100 million."They are one of the parties contributing to the settlement figure," a Sharman spokeswoman said in an e-mail. "(I) cannot say any more other than that the settlement costs are being shared amongst all settling parties."Kazaa was the dominant file-sharing network after the collapse of the original Napster, sold by Zennstrom and Friis in 2001 to Australia's Sharman Networks. The duo then joined Sharman as defendants in a copyright infringement lawsuit brought by the record labels and music studios.The lawsuit meant that Zennstrom and Friis had to avoid travelling to the United States, even when they sold their popular Internet telephony service Skype to eBay for $2.6 billion, for fear of being served with legal papers.After the settlement, the movie and music industries will have no legal action pending against Zennstrom and Friis.Under terms of the deal, Sharman will transform Kazaa into a legal service by screening for copyrighted material. The defendants will also pay more than $100 million to the music industry plaintiffs, and a sum in the tens of millions of dollars to Hollywood, according to sources familiar with the situation.Zennstrom, contacted by Reuters via telephone, declined to comment. A Skype spokeswoman also declined to comment, and Friis was not immediately available.The duo's legal problems may not be over quite yet. In March StreamCast Networks, which operates the file-sharing program Morpheus, sued Skype and its founders. StreamCast alleged that Skype violated its exclusive rights to a peer-to-peer technology called FastTrack P2P.
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