Jeffrey Katzenberg’s Quibi hasn’t had a lot of good news since its April 6, but today the courts gave the A-lister rich mobile streamer a boost.
“The Motion fails to make a sufficient showing of irreparable harm to Eko’s reputation and goodwill because of the technical implementation of Turnstyle that allegedly resulted from misappropriation of Eko’s claimed trade secret Mobile Device Optimized RTS,” ruled a federal judge today in the Meg Whitman-run Quibi’s bare knuckles legal slap down with the Elliott Management-backed interactive-video company Eko (READ IT HERE).
With conflicting complaints fired off from both parties since late March, the JBF Interlude 2009 Ltd controlled company sought a motion for a preliminary injunction against Quibi and its much hyped Turnstyle function – which would have really cramped the struggling app’s style.
“Having considered the parties’ arguments, the submission in support thereof, the Joint Report, and the transcript of the May 7, 2020 hearing, the Motion is denied,” declared Judge Christina Snyder in a heavily redacted order.
“Evidence does not indicate any significant investigation by Eko into Quibi’s product, which would be expected if Eko believed that Quibi had relied on Eko’s proprietary technology,” the District Court judge added, noting that Eko didn’t even go after Quibi until right on the eve of its launch. A timeline that she believed undermined Eko’s allegations that the Turnstyle tech was lifted years back by some ex-Snap staffers who joined Quibi and a 2017 meeting with Katzenberg.
While Judge Snyder made no call on the merits of the actual patent infringement and breach of contract.lawsuit and the parties had a hearing on other matters earlier Monday. However, Quibi took what they got and ran it up the flagpole fast and high today.
“We are extremely pleased the Court ruled today that Eko has not presented a credible case for a preliminary injunction,” said a Quibi spokesperson on Monday afternoon. “Eko has no case against Quibi – this is a frivolous lawsuit brought by a company and CEO looking for a payday. We will continue to aggressively defend ourselves.”
The other side said essentially the same thing, from a different POV.
“We look forward to presenting the merits of the case at trial, including our request for substantial damages,” said Eko’s top lawyer Neel Chatterjee following the release of the ruling
Aimed directly at Quibi’s smartphone target market and a big part of the service’s proclaied 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.
Having debuted in the lockdown of COVID-19, way down the list of downloaded apps and now having seen its 90-day free trial for potential subscribers expire, today’s order comes less than a week after Quibi took a bit of a public dousing.
On July 9, research firm Sensor Tower reported that a mere 72,000 subscribers had decided to pay $5 a month (or $8 without ads) for Quibi after the trial ended. That conversion rate, around 8%, does not bode very well, especially when compared to the likes of Disney+ and its 11% conversion rate for free trials to paid subscribers. Ever quick on the response, Quibi asserted that “the number of paid subscribers is incorrect by an order of magnitude.”
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, still.