Hedge fund Elliott Management Corp. is financing Eko’s patent lawsuit against streaming service Quibi, The Wall Street Journal reports. Eko’s suit claims that Quibi stole trade secrets and that its “Turnstyle” feature violates Eko’s patents. Turnstyle allows Quibi videos to play differently depending on the orientation —vertical or horizontal— of the viewer’s phone, switching in real time.
Eko wants Quibi to stop using its technology or license it and is suing for a preliminary injunction and damages. As part of the financing arrangement, Elliott would get an equity stake in Eko, according to the WSJ, though it’s not clear how much money is involved.
Quibi, the mobile video app that launched last month, raised nearly $2 billion to produce “quick bite” shows that last a max of 10 minutes. It filed a lawsuit against Eko a day before Eko filed its suit, asking a court to find that Turnstyle doesn’t infringe Eko’s patent. Quibi told The Verge in March that Turnstyle was its patented technology and that Eko’s claims were “without merit.”
A Quibi spokesperson reiterated its stance in a statement emailed to The Verge late Sunday. “As we made clear in our filing, Quibi’s patented Turnstyle feature is the result of the work from our talented engineering team,” the spokesperson said. “When a new product launches, these types of claims are unfortunately too common. Eko’s actions and complaints remain meritless.”
Elliott Management did not immediately respond to requests for comment on Sunday. An Eko spokesperson declined to comment.
Elliott Management is known for aggressive investor activism, backed by more than $40 billion in capital. The group was behind a recent push to replace Jack Dorsey as CEO of Twitter. The two sides reached an agreement in March that allowed Dorsey to remain as CEO but gave Elliott executive Jesse Cohn a seat on Twitter’s board, and a seat on a board committee tasked with evaluating a CEO succession plan for Twitter. Elliott also acquired a stake in AT&T in 2019, writing in a letter that the telco “suffered from operational and execution issues over the past decade, for which the current leadership team is accountable.” But it supported the recent appointment of AT&T COO John Stankey to CEO, according to CNBC.
(Disclosure: Vox Media, which owns The Verge, has a deal with Quibi to produce a Polygon Daily Essential, and there have been talks about a Verge show.)
UPDATE: May 3rd 6:40PM ET: Added information about Elliott’s role at AT&T
UPDATE May 3rd 7:06 PM ET: Added that Eko declined to comment.
UPDATE May 4th 9:50AM ET: Added comment from Quibi spokesperson