Jeffrey Katzenberg’s Quibi went very close to the mattresses today in federal court in its ongoing rumpus with the now Elliott Management-backed interactive-video company over motion flipping technology.
“This is a case built on circumstantial evidence,” Quibi’s top outside counsel Michael Jacobs proclaimed in a telephone hearing Thursday addressing the JBF Interlude 2009 Ltd controlled company’s motion for a preliminary injunction against the April 6-launched A-lister packed mobile streamer.
“It’s just statements that he might have, could have,” the Morrison and Foerster LLP lawyer asserted of the role of one-time Snap (AKA Snapchat) employee Clifton Smith, who subsequently moved over to the Meg Whitman-run outlet.
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Kicked off with a preemptive March 9 complaint for declaratory judgment by Quibi itself, Eko’s subsequent swirl of alleged tech sticky fingers and the suppose “irreparable harm” that Smith and fellow ex-Snapper Joseph Burfitt, brought to the matter, as well as a high level sit down with Katzenberg three years ago, is the supposed smokin’ keyboard here.
To douse that and the inclusion of Smith’s name on the Turnstyle patent, Jacobs noted that it was Quibi’s head of engineering Eric Buehl who wrote the code actually in question.
Regardless, Jacobs today also insisted that in fact Eko isn’t being harmed at all by Turnstyle on Quibi. On the other hand, deep pocketed newbie Quibi would be pretty much ravaged if the much-hyped portrait-to-landscape function was “ripped out” of the $4.99 (with ads) to $7.99 (no ads) proposition.
Noting that “Quibi’s idea is to marry technology with content,” Jacobs told Judge John A. Kronstadt that if the company “disabled” the contested Turnstyle gimmick of sorts “we’d have to figure out how to deliver content to our users in a very turbulent time in the world when Quibi is trying to sign up customers.”
That clear reference to the economic spiral of this time of coronavirus pandemic restates what was already a challenging launch for the on-the-go based Quibi last month in an America where few beyond first responders and delivery drivers are the few actually on-the-go.
“The harm to Quibi would be quite severe,” Jacobs stated of the loss of the novelty aspect of the service.
Aimed squarely at the smartphone crowd and a big part of Quibi’s unique offering at launch, the Turnstyle feature allows viewers of short shows like the Chance the Rapper hosted Punk’d revival, Idris Elba in cars and Chrissy’s Court, plus segmented movies with Liam Hemsworth and Sophie Turner, to literally flip their devices for whole new aspects of the programming.
“Half of the asset for each particular show disappears,” Jacobs bluntly said to Judge Kronstadt and the other listening lawyers today of the consequences of Eko getting the preliminary injunction they desire.
Lead by Indra Neel Chatterjee, the other side scoffed at that doomsday scenario, noting that Quibi is considering releasing a TV and a laptop version of its content – which wouldn’t have a flipping tech capacity.
Going into a closed session after just over an hour, the telephone hearing ended slightly after 1:10 PM PT with no ruling from the U.S. District judge.
“Quibi is very hard pressed to say that they didn’t have access to the technology,” Eko’s lead lawyer Chatterjee countered in advance to the company’s stance in his own comments to the court.
“There was no independent development …what you have here is complete scrambled eggs,” the Goodwin Procter LLP attorney added, noting the various vital members of Snap moved over to Quibi after supposedly being exposed at length to the tech in question. Adding to the mix, Eko’s CEO Yoni Bloch also met with Katzenberg face-to-face in March 2017 to supposedly discuss the portrait-to-landscape tech and an investment that never materialized.
“It is a completely interlocking case, with the people who had the information.” Chatterjee emphasized in his remarks on the phone with opposing counsel in attendance.
The fairly flawless remote proceeding overseen by Judge Kronstadt was preceded in recent weeks by both sides presenting extensive PowerPoints, executive and expert declarations on the contentious trade secret matter.
Among the unsealed portion of that paper work is an April 13 declaration from Katzenberg himself.
“I met and communicated regularly with members of my team at Quibi throughout the development of our service,” the WndrCo managing partner told attorneys under oath last month of the situation that has loomed over the mobile streamer’s already COVID-19 hindered lift-off. “I have full confidence that Quibi’s app and Turnstyle functionality were created by our team through a lengthy process of experimentation, design, development, and testing, and not based on any technology pitched or otherwise disclosed by Eko,” Katzenberg expressed in obviously protective and less qualified than expected language.
“It was with this confidence that I have been personally participating in promoting and marketing Quibi’s app.”
Claiming that the app had a solid 1.7 million downloads in its first week last month, Quibi adjusted to the unprecedented times right now by offering a 90-day free trial to those who sign up on its website in the week before launch. Having raised $1.75 billion to fund the short-form streaming service before its early April debut, Quibi plans to release 175 original shows and 8,500 episodes in its first year.
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