(Bloomberg) — Quibi, the video-streaming service started by former Walt Disney studio head and DreamWorks co-founder Jeffrey Katzenberg, must defend a lawsuit claiming it stole its signature “turnstyle” technology from an Israeli company.
A federal judge in Los Angeles on Tuesday denied Quibi’s request to dismiss the lawsuit brought by Eko, which claims it showed its proprietary rotation technology to Katzenberg as early as 2017 and to Quibi executives in later meetings.
The Wall Street Journal reported in May that Elliott Management Corp. is financing Eko’s lawsuit. As part of the financing, the hedge fund manager would end up with a stake in Eko, the newspaper said, citing unidentified people familiar with the situation.
The feature at issue allows viewers to switch seamlessly between a full-screen landscape version of a scene and full-screen portrait version on their mobile phone.
U.S. District Judge Christina Snyder refused to toss out Eko’s trade-secret misappropriation and patent-infringement claims, although she did dismiss breach-of-contract and unfair competition allegations. Earlier this month, she denied Eko’s bid to block Quibi’s use of the technology while the question of who owns it is litigated.
The judge also rebuffed Eko’s request to throw out Quibi’s separate, earlier lawsuit seeking a ruling that it wasn’t infringing Eko’s patent.
Quibi said it’s gratified by the decision. The ruling, along with the judge’s denial of a preliminary injunction, shows the case has no merit, a company spokesperson said.
Eko is the brainchild of Israeli rockstar Yoni Bloch to create interactive videos. Eko said it was pleased the judge found that its key claims state valid causes of action and that it plans to refile pleadings pertaining to the remaining three claims.
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Quibi, which is run by former EBay Chief Executive Officer Meg Whitman, launched in April.
The cases are Quibi Holdings v. Interlude U.S., 20-cv-2250, and JBF Interlude 2009 Ltd.-Israel v. Quibi Holdings, 20-cv-2299, U.S. District Court, Central District of California (Los Angeles).
(Updates with Eko’s statement in eighth paragraph.)
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