Quibi Complaint
Quibi Complaint
Quibi Complaint
1 PRELIMINARY STATEMENT
2 1. Plaintiff Quibi Holdings, LLC (“Quibi”) has developed a new digital
3 platform for delivering premium entertainment content to consumers — using
4 innovative technology that for the first time makes video beautiful on your phone.
5 Quibi’s streaming service features top talent and extraordinary storytelling,
6 designed for the small screen and delivered in episodes of 10 minutes or less.
7 2. Set to launch on April 6, 2020, Quibi’s mobile app is the product of
8 many months of tireless work by Quibi’s talented team of engineers, who designed,
9 engineered, tested, and refined the app. Quibi demonstrated key features of its app,
10 including its new Turnstyle technology, in a keynote address at the Consumer
11 Electronics Show (“CES”) on January 8, 2020. Unfortunately, with the advertised
12 launch of a high-profile new service, Quibi has already been targeted by a company
13 looking to make a name for itself and to capitalize on Quibi’s early acclaim by
14 making demonstrably false claims of intellectual property infringement.
15 3. Defendant Interlude US, Inc., d/b/a Eko (“Eko”) is a company that
16 promotes interactive video. After seeing Quibi’s keynote address at CES, Eko
17 embarked on a campaign of threats and harassment to coerce money or a licensing
18 deal from Quibi. Eko’s activities include wrongfully (1) accusing Quibi of
19 infringing an Eko patent, U.S. Patent No. 10,460,765 (“the ’765 patent”), and of
20 misappropriating trade secrets; (2) submitting a Notice of Complaint to the Apple
21 App Store in an attempt to derail the scheduled launch of Quibi’s app; and
22 (3) pitching to the Wall Street Journal and at least one other news outlet the false
23 narrative that Quibi infringes the ’765 patent and has misappropriated Eko’s trade
24 secrets.
25 4. As a result, an actual case and controversy exists between Quibi and
26 Eko, requiring Quibi to seek a declaratory judgment addressing the parties’ rights
27 and obligations, and to enjoin Eko from taking any further steps to improperly
28 tarnish Quibi’s brand or to interfere with Quibi’s highly anticipated launch.
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1 infringement demand letter to Quibi, a resident of this District, (c) causing a Notice
2 of Complaint alleging patent infringement and misappropriation of trade secrets to
3 be sent to Quibi through the Apple App Store, and (d) promoting, selling, and
4 offering to sell content available on its digital platform to residents in this District.
5 11. Venue in this District is proper under 28 U.S.C. §§ 1391(b) and
6 1391(c). Eko is subject to suit in this District by virtue of its commercial activities
7 in this District, and based on its specific contacts with Quibi that give rise to the
8 claims alleged in this complaint. Venue in this District also is proper because a
9 substantial part of the events giving rise to the claims in this action occurred in this
10 District. Quibi has its principal place of business in this District, its development
11 activities took place here, and Quibi sells and offers for sale the service targeted by
12 Eko from Quibi’s corporate headquarters and place of business in Los Angeles.
13 THE PATENT-IN-SUIT
14 12. The ’765 patent, entitled “Systems and Methods for Adaptive and
15 Responsive Video,” states on its face that it issued on October 29, 2019. A true and
16 correct copy of the ’765 patent is attached as Exhibit A.
17 STATEMENT OF FACTS
18 A. BACKGROUND RE: QUIBI’S DEVELOPMENT
19 13. Founded in 2018 by Jeffrey Katzenberg, Quibi was created to deliver
20 exclusive short-form premium video content to subscribers on a single-purpose
21 mobile platform. Quibi has engaged with top talent and directors to develop
22 content to be launched through the Quibi app.
23 14. Early in Quibi’s development, Quibi’s team of product designers and
24 engineers knew that it was important to enhance and optimize the customer-viewing
25 experience regardless of whether the phone was being held in “portrait” or
26 “landscape” mode, and that an opportunity existed to create new technology that
27 delivered a more elegant means of streaming video content that seamlessly adapted
28 to those changes in orientation.
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1 15. With that task in mind, beginning in September 2018, Quibi undertook
2 development of an app feature known as Turnstyle for determining the orientation
3 of a user’s phone and seamlessly switching content and displaying it based on
4 orientation. This is one of the features Quibi displayed at CES, and the feature that
5 Eko’s letters and false statements to the press now target. As explained in the
6 following sections, Eko’s allegations are entirely without merit.
7 B. QUIBI AND ITS FOUNDER’S LIMITED CONTACTS WITH EKO
8 16. In late March 2017, Quibi’s founder, Mr. Katzenberg, held an
9 informational meeting with Eko’s CEO, Yoni Bloch. The purpose of the meeting
10 was for Eko to pitch Mr. Katzenberg for an investment in Eko, which by then had a
11 publicly available digital platform and content that was being actively marketed by
12 Eko.1 The meeting was not conducted under a non-disclosure agreement or any
13 other expectation of confidentiality. No confidential information was requested or
14 provided to Mr. Katzenberg.
15 17. While Mr. Katzenberg barely remembers the meeting, an email sent on
16 March 23, 2017, by Mr. Bloch to Mr. Katzenberg reflects that Eko’s focus was in
17 pitching its choice-driven, interactive entertainment model, as discussed in an article
18 published in The New Yorker that Mr. Bloch forwarded via a link in his email.
19 Mr. Katzenberg ultimately thanked Mr. Bloch for his visit and decided not to invest.
20 18. In July 2018, Mr. Katzenberg formed Quibi based on an idea he had
21 generated several years earlier for a “quick bites” entertainment service. Quibi
22 developed its service and technology during 2018 and 2019 entirely independently
23 — without any input, reference to, or materials or information from Eko.
24 19. In February 2019, well after development of Quibi’s app was
25 underway, two Quibi employees held a breakfast meeting with Eko at a Beverly
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27 As noted below, by that point, the U.S. Patent and Trademark office had
published the application for the Eko patent at issue in this lawsuit, mooting any
28 claim of confidentiality in that application’s material as a matter of law.
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1 Hills restaurant. The purpose of the meeting was to get reacquainted and for Eko to
2 pitch unscripted video content to Quibi. The meeting was not conducted under a
3 NDA or other expectation of confidentiality, and no proprietary information or trade
4 secrets were exchanged. The participants indicated that they would keep in touch.
5 20. On March 28, 2019, two Quibi employees visited Eko’s offices in New
6 York and demonstrated features of Quibi’s platform. Again, no nondisclosure
7 agreement was in place, and no proprietary information or trade secrets were
8 exchanged. Following the New York meeting, on April 1, 2019, an Eko employee
9 emailed Quibi, “Loved your demo, and excited to see where you guys are headed.”
10 21. Eko’s recent demand letter to Quibi alleges that certain employees of
11 Quibi who previously worked at Snap obtained unspecified “trade secrets” and
12 “source code” for Eko’s service while working at Snap. (Ex. B.) These allegations
13 are untrue and implausible on their face: The employees referenced by Eko are not
14 engineers or computer programmers, do not read source code, and would have had
15 no reason to request or obtain Eko code. In any event, no Quibi employee brought
16 or used any Eko trade secrets, computer code, or proprietary information to Quibi.
17 C. QUIBI’S PUBLIC UNVEILING OF TURNSTYLE
18 22. As stated above, Quibi’s team of engineers designed, developed,
19 tested, and refined Quibi’s app over many months starting in September 2018. On
20 March 8, 2019, Quibi applied for a patent for various aspects of its technology,
21 which has issued as U.S. Patent No. 10,554,926 (“Quibi’s ’926 patent”).
22 23. Mr. Katzenberg and his team demonstrated key features of Quibi’s app
23 to the world during the keynote address at CES on January 8, 2020. As the
24 presentation showed, Quibi’s app presents an elegant delivery of content that is
25 responsive to changes in the orientation of a user’s phone. The images excerpted
26 below from the CES keynote address show streaming content that changes based on
27 a change in the orientation of a user’s phone:
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8 D. EKO’S MERITLESS ACCUSATIONS OF INFRINGEMENT
9 24. Two weeks after CES, on January 28, 2020, Eko’s attorneys sent a
10 demand letter to Quibi, asserting that Quibi’s Turnstyle feature employs the
11 technology claimed and disclosed in the ’765 patent. The letter demanded that
12 “Quibi immediately stop the use of its Turnstyle technology . . . .” A copy of Eko’s
13 January 28 letter is attached as Exhibit B.
14 25. On February 10, 2020, Quibi responded to the January 28 letter,
15 explaining that Quibi’s Turnstyle feature does not use any invention claimed in the
16 ’765 patent, and that Quibi’s technology was developed independently and not
17 using any Eko trade secret. A copy of Quibi’s February 10 letter is attached as
18 Exhibit C.
19 26. Also in early February 2020, Eko contacted a technology reporter for
20 Recode.net and reiterated the false allegations that Quibi’s Turnstyle feature
21 infringes Eko’s ’765 patent and was created using misappropriated trade secrets.
22 27. On or about March 2, 2020, Eko sent a notice to Apple Inc. alleging
23 that Quibi’s app infringes Eko’s ’765 patent and was created using misappropriated
24 trade secrets. A copy of the Notice of Complaint transmitted to Quibi by the Apple
25 App Store is attached as Exhibit D.
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1 28. The following day, Quibi responded to the Apple App Store
2 complaint, explaining that Quibi’s app does not infringe the ’765 patent and that the
3 app was not developed using any Eko trade secrets. A copy of Quibi’s response to
4 the App Store complaint is attached as Exhibit E.
5 29. Recently, Eko has repeated its allegations of infringement and
6 misappropriation by Quibi to a reporter and editor of the Wall Street Journal.
7 Eko’s statements reiterated its frivolous allegations that Quibi infringes the
8 ’765 patent and had misappropriated Eko’s trade secrets.
9 30. By virtue of these acts, an actual and justiciable controversy exists
10 between the parties concerning Quibi’s liability for alleged infringement of the
11 ’765 patent and misappropriation of trade secrets. Eko has also created a
12 reasonable apprehension of suit against Quibi for alleged infringement of the
13 ’765 patent and misappropriation of trade secrets that could wrongfully impact
14 Quibi’s ability to make, use, sell, or offer to sell Quibi’s products. Quibi seeks a
15 declaratory judgment that its Turnstyle feature does not infringe the ’765 patent and
16 that Quibi has not misappropriated any Eko trade secrets.
17 FIRST CLAIM FOR RELIEF
18 (Declaratory Judgment of Non-Infringement of the ’765 Patent)
19 31. Quibi incorporates the allegations in paragraphs 1 through 30 above as
20 if set forth fully herein.
21 32. The scope of a patent is determined by its claims. For a product to
22 infringe a patent, every limitation of a patent’s claim must be met. The claims of
23 the ’765 patent and the patent’s path through the U.S. Patent Office make clear that
24 Eko has obtained a narrow patent that Quibi does not infringe. Among many
25 reasons, the ’765 patent’s claims require transitioning between video presentations
26 in response to determining whether a window of a media player has been resized
27 and whether the resized window is within particular height and width ranges —
28 which Quibi does not do.
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1 45. An actual and justiciable controversy has arisen and exists between
2 Quibi and Eko. A judicial determination and declaration that Quibi has not
3 infringed and does not infringe any claim of the ’765 patent is necessary and
4 appropriate at this time so that the parties may ascertain their respective rights and
5 duties regarding the ’765 patent.
6 SECOND CLAIM FOR RELIEF
7 (DECLARATORY JUDGMENT OF NO MISAPPROPRIATION OF TRADE SECRETS)
8 46. Quibi incorporates the allegations in paragraphs 1 through 45 above, as
9 if set forth fully herein.
10 47. The DTSA defines a trade secret as “financial, business, scientific,
11 technical, economic, or engineering information” that “(A) the owner thereof has
12 taken reasonable measures to keep . . . secret; and (B) . . . derives independent
13 economic value, actual or potential, from not being generally known to, and not
14 being readily ascertainable through proper means by, another person who can
15 obtain economic value from the disclosure or use of the information.” 18 U.S.C.
16 § 1839(3).
17 48. Similarly, the CUTSA defines a trade secret as “information, including
18 a formula, pattern, compilation, program, device, method, technique, or process
19 that: (1) [d]erives independent economic value, actual or potential, from not being
20 generally known to the public or to other persons who can obtain economic value
21 from its disclosure or use; and (2) [i]s the subject of efforts that are reasonable
22 under the circumstances to maintain its secrecy.” Cal. Civ. Code § 3426.1(d).
23 49. Under both the DTSA and the CUTSA, “misappropriation” is (1) the
24 “[a]cquisition of a trade secret by another person who knows or has reason to know
25 that the trade secret was acquired by improper means;” or (2) the “[d]isclosure or
26 use of a trade secret of another without express or implied consent.” 18 U.S.C.
27 § 1839(5); Cal. Civ. Code § 3426.1(b).
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1 54. An actual and justiciable controversy has arisen and exists between
2 Quibi and Eko concerning Eko’s allegations of trade secret misappropriation.
3 Accordingly, a judicial determination and declaration that Plaintiff has not
4 misappropriated any Eko trade secret is necessary and appropriate at this time.
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6 PRAYER FOR RELIEF
7 WHEREFORE, Quibi requests that the Court enter judgment in Quibi’s favor
8 and against Eko as follows:
9 A. Declaring that Quibi has not and does not infringe, directly or
10 indirectly, literally or by equivalents, any claim of the ’765 patent;
11 B. Declaring that Quibi’s Turnstyle feature does not infringe any claim of
12 the ’765 patent;
13 C. Enjoining Eko, its subsidiaries, affiliates, parent, successors, assigns,
14 officers, agents, servants, employees, attorneys, and all persons acting
15 in concert or participation with them, from asserting any claim of the
16 ’765 patent against Quibi;
17 D. Declaring that Quibi has not misappropriated any trade secret from
18 Eko;
19 E. Enjoining Eko, its subsidiaries, affiliates, parent, successors, assigns,
20 officers, agents, servants, employees, attorneys, and all persons acting
21 in concert or participation with them, from asserting any claim for
22 misappropriation of trade secrets under the DTSA, CUTSA, or other
23 state law governing the disclosure or use of trade secrets;
24 F. Ordering Eko to withdraw its Notice of Complaint of infringement to
25 the Apple App Store dated March 2, 2020;
26 G. Denying any request by Eko for injunctive relief;
27 H. Awarding Quibi its attorney’s fees and costs incurred in responding to
28 Eko’s bad faith allegations of trade secret misappropriation, pursuant
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