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Jeffrey Katzenberg’s Quibi Settles Legal Spat With Eko, Transfers Mobile-Video Tech to Eko

·3 min read

QuibiJeffrey Katzenberg’s short-lived, short-form premium video startup — shut its doors nearly a year ago. But it has lived on as holding company because of a legal battle with interactive-video firm Eko, which alleged Quibi stole trade secrets and infringed Eko patents.

Now the companies have buried the hatchet: Eko and QBI Holdings LLC announced that they have agreed to dismiss all of their legal claims against each other.

Under the terms of the settlement, QBI Holdings (formed after the Quibi programming assets were sold to Roku and the Quibi app was shut down) will transfer the intellectual property and technology for the Turnstyle mobile-video viewing feature to Eko. Turnstyle had been at the heart of the dispute.

Financial terms of the settlement are not being disclosed. A source familiar with the agreement told Variety that no money is changing hands between the companies.

“We are satisfied with the outcome of this litigation, and proud of the independently created contributions of Quibi and its engineering team to content presentation technology,” Katzenberg, founder and chairman of Quibi, said in a prepared statement.

Eko founder and CEO Yoni Bloch commented, “This result will help ensure that Eko remains the undisputed leader in interactive storytelling technology.”

According to the companies, “The parties will have no further comments regarding the lawsuits or their resolution.”

In March 2020 — less than a month before the ill-fated launch of Quibi’s mobile subscription service — Eko sued Quibi over Turnstyle, the technology Quibi used to determine the orientation of a viewer’s phone (either horizontal or vertical) and display the content in the appropriate mode. Eko had been seeking more than $100 million in damages from Quibi.

A judge in a December 2020 found “sufficient” circumstantial evidence that three former Snap employees — who had received an NDA briefing from Eko’s Bloch on his company’s interactive-video tech before joining Quibi — had engaged in theft of trade secrets, as Eko had alleged. But the court denied Eko’s request to freeze Quibi’s assets because “Eko has not shown it will more likely than not succeed on its [patent] infringement claims.”

The Eko lawsuit against Quibi was funded by activist hedge fund Elliott Management, which acquired a minority equity stake in the company last year.

The legal fight took a personal turn: In a court filing, Quibi suggested that Paul Singer, Elliott’s founder and co-CEO, was backing the Eko suit because his girlfriend’s son works at the company. “Although media coverage has suggested that Elliott brings gravitas and a rigorous analysis to its litigation investments, Elliott’s motivation for involvement in the lawsuit appears personal,” Quibi said in a February 2021 filing. In response, Elliott general counsel Richard Zabel had said, “The irrelevance of Quibi’s focus on personal matters in order to put forward a false narrative about Elliott’s role related to this case demonstrates Quibi’s reluctance to engage forthrightly on the actual underlying legal issues. Elliott decided to finance this litigation because we strongly believe that Eko will prevail in its claim that Quibi stole its valuable intellectual property.”

In addition to Elliott Management, Eko’s shareholders include Walmart, which invested $250 million in the company as part of a content-development pact.