Interactive-video firm Eko says it will continue to pursue its patent and trade-secret theft litigation against Quibi, after Jeffrey Katzenberg and Meg Whitman announced the startup will wind down operations and seek to sell its assets less than seven months after Quibi launched.
New York-based Eko sued Quibi in March for allegedly infringing one of Eko’s patents and misappropriating trade secrets. The dispute centers on Quibi’s Turnstyle feature, which determines the orientation of a viewer’s phone (either horizontal or vertical) and presents content in the appropriate mode.
Quibi has called Eko’s claims baseless. In July, a judge in the case dismissed three of Eko’s nine claims, leaving in place its core complaints over the theft and infringement of its mobile-video playback technology.
Eko lawyer Neel Chatterjee, partner in Goodwin Procter’s intellectual property practice, said in a statement: “We have put Quibi on notice that it cannot simply wind down its business, send its investors hundreds of millions of dollars and sell its stolen technology to a third party without first resolving its issues with Eko. We intend to vigorously pursue Eko’s rights to ensure that Quibi does not exacerbate the harm it has already caused.”
Reps for Quibi did not respond to a request for comment.
On Wednesday, Quibi confirmed that it will close its doors, with Katzenberg admitting that “our standalone business model is no longer viable.” The remaining cash on hand from Quibi’s $1.75 billion in funding will be returned to investors, which include Disney, WarnerMedia and NBCUniversal, the company said. The shutdown leaves Quibi’s 200-some staffers jobless and dozens of projects with partners up in the air.
Eko’s lawsuit is being funded by activist hedge fund Elliott Management, which took a minority equity stake in the company this spring. Other Eko backers include Walmart, which invested $250 million in the company as part of a content-development pact.
Eko asserts that Quibi blatantly copied Eko’s features that use one of its key patents, U.S. Patent No. 10,460,765, covering a system for interactive video playback.
In court filings, Quibi claims it began developing Turnstyle in September 2018 and noted that in February 2020 it was granted a patent covering various aspects of the technology. Quibi also claims Eko tried to “coerce” payments from Quibi related to Eko’s own patent.
According to the Eko lawsuit, “Quibi ignored Eko’s warnings and Quibi secretly misappropriated Eko’s proprietary technology” and that “It hid its theft until making a massive public splash in a keynote address at the January 2020 Consumer Electronics Show… proclaiming it as Quibi’s own ‘Turnstyle’ technology.”
The judge in the case previously rejected Eko’s request for an injunction seeking to block Quibi’s app from using the allegedly stolen technology. In July, U.S. District Judge Christina A. Snyder also dismissed a claim involving Katzenberg, Quibi’s founder, ruling there was no evidence that Katzenberg entered into an “implied contract” when he took a meeting with Eko CEO Yoni Bloch. The judge also dismissed a claim accusing two former Snap employees who went to work for Quibi of stealing trade secrets, as well as a claim alleging that Quibi’s logo was confusingly similar to Eko’s.