Quibi rival demands asset freeze in patent-infringement claim

Eko -- a tech startup that has accused Jeffrey Katzenberg's ill-fated video-streaming app Quibi of infringing on its patented technology -- is asking the court to freeze Quibi's assets.

Eko — a tech startup that has accused Jeffrey Katzenberg’s ill-fated video-streaming app Quibi of infringing on its patented technology — is asking the court to freeze Quibi’s assets as it winds down its business.

Quibi, which is shutting down just six months after its launch, said last week that it would sell its assets and pay off deep-pocketed investors. But Eko asked a federal district court judge in California to set aside at least $101.9 million and for bank accounts and other assets connected to the technology to be frozen, according to court papers filed this week.

Eko’s lawsuit, financed by billionaire Paul Singer’s hedge fund Elliot Management, concerns a Quibi feature called “turnstyle,” which allows users to play different videos depending on how they are holding their phone — vertically or horizontally. The video switches in real time between the horizontal and vertical versions.

Quibi has denied infringing on Eko’s patents or misappropriating trade secrets and has called the lawsuit “meritless,” despite hiring a private investigator to dig up dirt on Eko’s founder Yoni Bloch as well as Singer.

Founded by Hollywood mogul Katzenberg and run by former Hewlett Packard CEO Meg Whitman, Quibi was designed for watching short-form videos on mobile phones while on-the-go. The duo enlisted celebrities like Jennifer Lopez, Chrissy Teigen, Kevin Hart and LeBron James to star in Quibi shows, but customers did not take to the service.

Katzenberg blamed Quibi’s April 6 launch — in the middle of the pandemic, a time when no one was on-the-go — as central to why the venture failed.

After the shutdown announcement, Eko was looking for assurances from Quibi that the business wouldn’t sell off the turnstyle tech and would retain cash to cover a payout if Eko won the legal battle.

“This is just another attempt by Eko to abuse the legal system. Quibi’s announcement that it is beginning an orderly wind-down changes nothing with respect to the litigation,” Quibi said in a statement. “We strongly believe the law and facts are on our side and we will continue to vigorously defend against this meritless lawsuit.”

Eko, which creates video that viewers can interact with, hired economist, Richard J. Eichmann, to provide a valuation of what Eko is owed. In a declaration filed in court, he said Quibi should reserve at least $96.5 million to account for the nonexclusive use “of the allegedly stolen intellectual property at issue in this case.”

The remainder of the $101.9 million Eko is asking to be set aside is meant to cover legal fees and potential interest, the company said.

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