Quibi's Dispute with Eko Over Turnstyle Feature Trimmed By Judge

Jeffrey Katzenberg's startup must fight allegations of patent infringement and stealing trade secrets, though claims over its logo and alleged contract breaches have been dismissed.
Courtesy of Quibi

Quibi can't avoid a further fight with Eko over the origins of its video rotation technology, but a California federal judge narrowed the scope of their dispute.

At the center of the suit is Quibi's Turnstyle feature, which lets viewers watch video horizontally or vertically on their devices and rotate between those positions without disrupting the experience. Eko claims it invented the technology behind the feature and Quibi employees stole it through a series of meetings and pitches.

The companies filed dueling lawsuits in early March. Quibi fired first asking the court for a declaration that it doesn't infringe Eko's patent and that it hasn't misappropriated any trade secrets and for an injunction barring Eko from continuing to make such allegations. Eko shot back asking the court to give it ownership of Quibi's patent and bar the company from using the trade secrets it's accused of stealing.

Each of the parties this spring filed a motion to dismiss the other's complaint. U.S. District Judge Christina Snyder heard arguments on July 13 and on Tuesday issued her ruling.

Snyder denied Eko's motion to dismiss Quibi's complaint, but granted its motion to consolidate the two matters — at least for pre-trial proceedings. She'll decide later whether to consolidate them for trial. 

Quibi moved to dismiss all nine of Eko's claims. Snyder granted dismissal without prejudice on three of them, breach of implied contract, breach of a nondisclosure agreement and false association.

She's not convinced that Jeffrey Katzenberg's March 2017 meeting with Eko CEO Yoni Bloch established a contractual obligation to pay Eko for "the use of ideas publicly disclosed in its patent application." She also found that Quibi's use of a "white-on-purple square logo" that allegedly resembled Eko's doesn't amount to false association under the Lanham Act.

Snyder denied dismissal of the claims for trade secret misappropriation, patent infringement and patent ownership.

At this stage, during which the plaintiff's allegations are largely accepted as true, Snyder found Eko has adequately alleged its Optimized Real Time Switching (ORTS) method is a trade secret, that Quibi knew or should have known it was confidential property and that employees with access to the trade secrets used it to build Turnstyle.

"Although it is conceivable that the same Quibi engineers who allegedly had access to the ORTS method nevertheless employed some other method to develop the Turnstyle feature just months after joining Quibi ... that is a defense on the merits that Quibi may choose to pursue with evidence at a later stage," finds Snyder. 

An Eko rep sent The Hollwood Reporter a statement following the decision: “We are pleased that the court has found that Eko’s key claims state valid causes of action and we plan to refile pleadings pertaining to the remaining three claims, as the judge has recommended. We look forward to proceeding with the case.”

Quibi also sent THR a statement. "We are gratified by the Court’s decision to dismiss many of Eko’s claims, particularly since the standard for doing so is extremely high," it reads. "This coupled with the Court’s recent denial of Eko’s request for a preliminary injunction demonstrate what we have said all along — this is a meritless case. We will continue to aggressively defend ourselves in court.”

Earlier this month Snyder denied Eko's motion for a preliminary injunction that would have barred Quibi from using the feature while the litigation played out. Trial is currently set for April 2022.