Stakes Jump In Quibi Legal Fight As Ellliott Management Finances Eko Lawuit Against Jeffrey Katzenberg-Founded Streamer – Report


Activist hedge fund Elliott Management, which recently extracted concessions from AT&T and Twitter, has Quibi in its sights, financing interactive video company Eko’s patent-infringement lawsuit against the streamer, according to a report in the Wall Street Journal Sunday.

As part of the financing, Elliott would end up with an equity stake in Eko, WSJ said, citing people familiar with the situation.

Beyond reiterating their statement of several weeks ago saying that “Eko’s actions and complaints remain meritless,” Quibi today did not have anything to say about the new presence of Elliott to the situation.

The news raises the stakes in the acrimonious legal battle that started in March when Eko sued Quibi for stealing technology for a feature called Turnstyle, which adjusts videos for users in real time by switching between horizontal and vertical versions. After Quibi first jumped into the legal realm, Eko sued for a preliminary injunction and damages in Los Angeles federal court.

Elliott, run by billionaire Paul Singer, has more than $40 billion under management and is known for aggressively pursuing changes at companies it invests in. It pressured AT&T to commit to reducing hefty debt following the acquisition of Time Warner. It took aim at Twitter and its CEO Jack Dorsey before coming to terms with the company and gaining a signficant presence on the board. (Outside of media, Elliott is particularly well known for taking a stand against the country of Argentina in a 15-year battle to recoup payments from defaulted bonds.)

The WSJ said Singer’s foray into litigation financing is unusual. He has ties to the technology community in Israel, where Eko was founded, and to some of its investors, and believes in the tech firm’s prospects.

With both parties sending in somewhat redacted declarations and other material digitally, a hearing on Eko’s request for a preliminary injunction is scheduled for later this week in federal court. Due to restrictions because of the coronavirus pandemic, the anticipated hearing will be conducted via telephone with U.S. District Judge John A. Kronstadt.

Katzenberg raised $1.75 billion to fund the short-form streaming service. Targeted for viewers on the go, it launched April 6 into a shelter-at-home pandemic.

Mincing no words in its lawsuit, Eko said that Quibi, “under enormous pressure to deliver on the media hype it generated, was desperate to find a way to deliver content. Not having the technology to do so, it misappropriated Eko’s trade secrets, claiming them as its own.”

Dominic Patten contributed to this report

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