Eko, an interactive video company, accused Quibi of infringing one of its patents as well as misappropriating its trade secrets. In response, Quibi preemptively filed a complaint in the United States District Court for the Central District of California seeking a declaratory judgment of non-inringement of Eko’s patent and no misappropriation of trade secrets. The following day, Eko filed a complaint for patent infringement in the same court.
In Quibi’s original complaint, the mobile-video company seeks relief from Eko’s attempts to tarnish Quibi’s brand and interfere with the highly anticipated launch of its platform. Quibi argues Eko’s allegations result solely from the widespread advertisement of Quibi’s high-profile novel service. In particular, Quibi believes Eko is attempting to capitalize on Quibi’s early acclaim through “demonstrably false claims of intellectual property infringement.”
Quibi explains that two weeks after it announced its innovative platform at CES, an industry conference, Eko’s attorneys sent a demand letter to Quibi asserting that its turnstyle feature employs technology disclosed in Eko’s patent, thereby demanding Quibi immediately cease use of this proprietary technology. Quibi responded to the letter asserting its position but Eko proceded to contact a technology reporter to reiterate its false allegations and also, sent a notice to Apple, Inc. alleging Quibi’s app infringes Eko’s patent. Finally, Eko repeated its allegations to a reporter and editor of the Wall Street Journal. As a result of the foregoing, Quibi maintains its reasonably apprehended a lawsuit against it that could wrongfully impact its ability to release its service.
Quibi is an upcoming short-form mobile video platform set to launch April 6th. Quibi utilizes an innovative technology designed to display television shows and movies on a small screen, such as that found on a smartphone. The platform was designed to optimize customer-viewing experience on a mobile device regardless of whether the phone was being held in portrait or landscape mode. As such, Quibi strove to create new technology capable of streaming video content that seamlessly adapted to those changes in orientation. Moreover, each episode is delivered in ten minutes or less, known as a “quick bite.” This service is targeted toward a younger demographic who commonly experience decreasing time and attention spans and increasing use of mobile devices. As of its launch, Quibi plans to offer more than fifty titles.
In its complaint, Eko complains that Quibi’s turnstyle mobile-video technology infringes United States Patent No. 10,460,765 for “systems and methods for adaptive and responsive video.” Unlike the prior art, Eko’s patented feature does not crop or letterbox a presentation but instead, provides seamless transition from a first state of a video presentation to a second state of a video presentation. Eko asserts that, starting in 2015, and through 2018, Bloch met with three former Snap, Inc. employees under a nondisclosure agreement to integrate Eko’s technology into the Snapchat application. Three of those former Snap employees joined Quibi mere weeks prior to Quibi filing for its own patent on the turnstyle feature.
Both complaints address meetings that took place between the founders of the respective companies. In its separate complaint, Eko argues that, in 2017, Quibi’s founder, Jeff Katzenberg, met with Eko’s founder/Chief Executive Officer, Yoni Bloch, to discuss a potential investment in Eko. Eko claims to have demonstrated its horizontal-to-vertical video technology. Ultimately, however, Katzenberg declined to invest in Eko. Quibi, in its complaint, asserts that no confidential information was requested nor provided during the one-time meeting of the companies’ founders.
Traditionally, patents and trade secrets have presented opposite choices. Trade secrets derive protection through reasonable efforts to maintain secrecy and could theoretically last indefinitely. On the other hand, patents are only protectable through public disclosure. Indeed, patents are obtained through filing a patent application which discloses exactly what the inventor purports to be his invention. In addition, a patent only lasts a period of twenty years, upon the expiration of which the inventor’s monopoly is released for public use. Moreover, while one cannot legally use verbatim an inventor’s patent, reverse engineering of a trade secret is permissible.