Quibi has found itself in some troubled waters lately. A month before launch, the streamer had to file a lawsuit hoping to pacify Eko — an interactive-video company — over claims that Quibi infringed a patent they hold over a similar technology to the Turnstyle feature.
Now, it seems Eko has a new ally, as The Wall Street Journal reports that hedge fund giant, Elliott Management, has made a “substantial” investment funding the lawsuit. In return, Elliott Management will garner some equity stake in the company.
According to Variety, “Elliott Management has a history of buying shares in companies it believes are undervalued and agitating for changes to their businesses. Last fall it won several concessions from AT&T, including a commitment by the telco to refrain from major acquisitions. More recently, Elliott was party to a deal to add three new directors to Twitter’s board.”
Eko is suing for patent infringement and theft of trade secrets, as they claim they demonstrated a “horizontal-to-vertical video technology” for Quibi founder Jeffrey Katzenberg during an investment meeting back in 2017. Katzenberg decided to pass on the investment and later went onto file a patent on Turnstyle in 2019.
Additionally, Eko also claimed that “several months in 2017 and 2018” they met with three Snap employees over a possible integration of Snapchat and Eko. Those employees went on to join Quibi — two moved to the streamer in October of 2018 and the third went in spring 2019.
For their part, Quibi denied Eko’s claims. First, Katzenberg said he “barely remembers the [2017] meeting.” and in a statement, the company said, “The employees referenced by Eko are not engineers or computer programmers, do not read source code, and would have had no reason to request or obtain Eko code. In any event, no Quibi employee brought or used any Eko trade secrets, computer code, or proprietary information to Quibi.”
Days before the streaming service launched, Eko is took their claims to the next level by filing an injunction against the streamer. According to Deadline, a filing made on behalf of Eko on April 1 stated, “Plaintiff JBF Interlude 2009 Ltd. – Israel seeks a preliminary injunction enjoining Defendant Quibi Holdings LLC from misappropriating Eko’s proprietary technology for mobile device optimized ‘Real Time Switching.’ This trade secret technology, which is a critical part of Eko’s technology platform, had been shared with Quibi employees under multiple non-disclosure agreements.”