New short-form mobile video streamer Quibi, already challenged by relatively modest response since its launch on April 6, has also been dealing with a patent lawsuit over its Turnstyle feature.
Now, that suit is now being financed by feared activist investor hedge fund Elliott Management Corp., according to Wall Street Journal sources.
As reported here previously, Quibi has heavily touted Turnstyle — which automatically shifts video content on phones to horizontal or vertical mode, for optimal viewing — as a competitive differentiator in the fiercely competitive streaming business.
But in March, interactive video tech company Eko accused Quibi of infringing one of Eko’s patents and stealing its trade secrets in relation to technology now employed for Turnstyle. That suit was filed one day after Quibi had filed a federal suit seeking to preempt Eko’s claims by getting a court to rule that Quibi had not infringed Eko’s patent.
On April 1, Eko filed a motion in U.S. District Court for the Central District of California, seeking a preliminary injunction enjoining Quibi from “misappropriating Eko’s proprietary technology for mobile device optimized ‘Real Time Switching.'” New York-based Eko, whose official corporate name is Interlude US Inc., wants Quibi to stop using or license its technology.
A ruling on that request is expected as soon as this week, according to WSJ.
Meanwhile, however, Elliott, which is run by billionaire Paul Singer, has agreed to fund Eko’s suit in return for a “substantial” equity stake, the sources said. Eko was founded in Israel, and Singer has ties to that country’s technology business, and to some of Eko’s investors, they said, adding that Elliott believes in Eko’s case and its technology.
Quibi continues to deny that it infringed Eko’s patent.
Quibi maintains that it started developing Turnstyle back in September 2018, and the company was recently granted a patent for some aspects of the feature. “Our Turnstyle technology was developed internally at Quibi by our talented engineers and we have, in fact, received a patent for it,” the company has stated. “These claims have absolutely no merit and we will vigorously defend ourselves against them in court.”
Quibi co-founder and Hollywood power Jeffrey Katzenberg, the Hollywood power player who co-founded Quibi with former eBay CEO Meg Whitman, “famously waged a bitter legal battle with Disney over the terms of his contract,” settling it in 1999 for about $280 million, notes WSJ.
Quibi, whose internal documents indicated it set targets of securing more than 7 million paid subscribers in its first year and 16 million within three years, per WSJ, claimed 2.7 million app downloads two weeks in, but most of those are being generated by free trials, and no data have been released on viewership as yet.
Law suit apart, Quibi has had a very difficult start. The concensus is that Quibi will struggle badly or even collapse completely, but all it takes is a single standout show for Quibi to become one of the hottest streaming platforms in the world. A standout Gameshow will give Quibi interactivity, viewer participation and the fun and excitement factor which Quibi lacks right now. Add to that the prospect of regular cash prizes and suddenly Quibi is the place to be, the must visit destination for every streaming subscriber. I know because my company has developed such a versatile entertainment content, so we know what it can do for Quibi.