It appears that Skype was convicted for selling a VoIP phone, the SMCWSKP 100, made by SMC Networks, which uses the Linux kernel, without also supplying the source code, which is a prerequisite of GPLv2.

Skype apparently tried to rectify its mistake by providing a pamphlet with the packaging that provided a URL to where the source code could be obtained. However, that was not enough to satisfy the open source purists that brought the matter to the attention of the German court nor the court itself.

Summaries of the proceedings can be found here and here - translations from German to English over the net are a bit dicey but the gist of the matter is reasonably clear if you use Alta Vista's Babelfish.

In short, anyone who sells a Linux-based product must provide the source code with the product or face the consequences in the country in which it is sold. At least that's the case in Germany.

Exactly what punishment Skype can expect to suffer for its transgression, however, is not exactly clear.