Already battling the tough headwinds associated with launching a subscription mobile-only video service in a recessed shelter-at-home pandemic market, Quibi is now facing what seems to be an existential legal battle.
On Thursday, a Quibi lawyer told a federal judge that removing a core feature from the service called Turnstyle would cause it “immense harm.”
“We would have to rip out a function and figure out how to deliver content to our users in a very turbulent time in the world in which Quibi is trying to get customers to sign up for its business,” attorney Michael Jacobs said. “We’ve invested in two assets — a horizontal and a vertical asset. If we can’t implement Turnstyle, then half of that asset — for every particular show — that asset disappears.”
Also read: Quibi Legal Foe Eko Gets Backing from Activist Investor Elliott Management
Jacobs plead Quibi’s case to U.S. District Judge John Kronstadt in a public telephone hearing covered by Variety and several other media outlets.
Quibi is defending itself against a lawsuit filed in March by Eko. The New York company claims its technology has been stolen by Quibi to create Turnstyle, a feature that lets Quibi users easily toggle between portrait and landscape viewing modes.
Eko is seeking an injunction and recently received financial backing from activist hedge fund Elliott Management.
Eko claims it presented its technology under nondisclosure to Quibi engineers several years ago while they were employed at Snap Inc.
“Quibi is very hard-pressed to say they didn’t have access to the trade secrets,” Eko attorney Neel Chatterjee argued Thursday.
Also read: Can Quibi Build a Brand From Scratch Amid Stiff Streaming Competition?
Turnstyle is so core to Quibi’s offering, its shows are produced in separate landscape and portrait workflows—a dynamic that substantially drives up production costs.
Last month, Quibi founder Jeffrey Katzenberg made a declaration in the case, saying he wouldn’t have sought Quibi’s $1.75 billion in private backing if he wasn’t confident his engineering team came up with the Turnstyle technology.
“I met and communicated regularly with members of my team at Quibi throughout the development of our service,” Katzenberg testified. “I have full confidence that Quibi’s app and Turnstyle functionality were created by our team through a lengthy process of experimentation, design, development, and testing, and not based on any technology pitched or otherwise disclosed by Eko,” Katzenberg expressed in obviously protective and less qualified than expected language.
Thursday’s public hearing was followed by a private meeting between plaintiffs and defense attorneys with Judge Kronstadt.
The outcome of that meeting hasn’t been disclosed. But an air of doubt seems to be surrounding Quibi these days.
Notably, while linking to coverage of Thursday’s hearing, news aggregator Matt Drudge headlined his link, “Katzenber to lose legal battle over Quibi tech.”
