JBF Interlude 2009 Ltd - Israel v. Quibi Holdings, LLC

CourtDistrict Court, C.D. California
DecidedJuly 13, 2020
Docket2:20-cv-02299
StatusUnknown

This text of JBF Interlude 2009 Ltd - Israel v. Quibi Holdings, LLC (JBF Interlude 2009 Ltd - Israel v. Quibi Holdings, LLC) is published on Counsel Stack Legal Research, covering District Court, C.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
JBF Interlude 2009 Ltd - Israel v. Quibi Holdings, LLC, (C.D. Cal. 2020).

Opinion

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA CIVIL MINUTES — GENERAL ‘0’ Case No. CV20-2299-CAS (SKx) Date July 13, 2020 Title JBF Interlude 2009 Ltd - Israel v. Quibi Holdings, LLC

ee CHRISTINA A SNYDER Catherine Jeang Not Present N/A Deputy Clerk Court Reporter / Recorder Tape No. Attorneys Present for Plaintiffs: Attorneys Present for Defendants: Not Present Not Present

Proceedings: [REDACTED] (IN CHAMBERS) - Plaintiff's Motion for Preliminary Injunction (ECF No. 30; ECF No. 76; ECF No. 77)

I. INTRODUCTION Plaintiff JBF Interlude 2009 Ltd. — Israel (“Eko”) is a technology company that describes itself as a platform for interactive multimedia storytelling and licensing partner for others to use its platform for developing content. On January 8, 2020, defendant Quibi Holdings, LLC (“Quibi’) debuted publicly its mobile device application and service at the Consumer Electronics Show (“CES”) in Las Vegas, which included Quibi’s “Turnstyle” feature that enables, inter alia, mobile device users to change between portrait and landscape mode while watching a video without wasting unused screen area. On April 6, 2020, Quibi launched its video-streaming service that delivers short-form video content to its subscribers on mobile devices and that includes its Turnstyle feature. On March 10, 2020, in advance of Quibi’s planned April 6, 2020 release date, Eko filed this action against Quibi based on Quibi’s Turnstyle feature and advanced two claims for misappropriation of trade secrets under the federal Defend Trade Secrets Act (“DTSA”) and for patent infringement. See ECF No. 1. (“Compl.”). This action was filed one day after Quibi filed suit against Eko’s United States subsidiary, Interlude US, Inc. d/b/a Eko,’ for declaratory relief as to non-infringement of Eko’s patent and as to no misappropriation of trade secrets under DTSA or the California Uniform Trade Secrets Act (““CUTSA”). See

1 Although elsewhere in this action the parties have identified JBF Interlude 2009 Ltd - Israel as “JBF” and Interlude U.S., Inc. as “Eko,” this Order will refer to JBF Interlude 2009 Ltd - Israel as “Eko” as the Motion does. See ECF No. 30 at 3.

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA CIVIL MINUTES — GENERAL ‘0’ Case No. CV20-2299-CAS (SKx) Date July 13, 2020 Title JBF Interlude 2009 Ltd - Israel v. Quibi Holdings, LLC

Quibi Holdings, LLC v. Interlude US, Inc., No. 2:20-cv-02250 CAS (SKx) (C.D. Cal. Mar. 9, 2020), ECF No. 1 (the “Related Action’). On April 1, 2020, Eko filed an ex parte application for a preliminary injunction. ECF No. 25. Later that day, the application was stricken for selecting the wrong event for a motion. See ECF No. 27. On April 1, 2020, Eko then filed a regularly noticed Motion for Preliminary Injunction (the “Motion”). ECF No. 30, ECF No. 76 (sealed), ECF No. 77 (redacted). Quibi filed an opposition (the “Opposition”). ECF No. 80 (sealed), ECF No. 81 (redacted). Eko filed a reply (the “Reply”). ECF No. 107 (sealed), ECF No. 108 (redacted). Leave was granted for Quibi to file a sur-reply. See ECF No. 136, ECF No. 152 (sealed), ECF No. 153 (redacted). Because the Motion scheduled a hearing for a closed motion date, Memorial Day, May 25, 2020, the hearing was continued to June 29, 2020. ECF No. 32. On April 7, 2020, Eko’s ex parte application to shorten the time for hearing was granted and the hearing was scheduled for May 4, 2020. ECF No. 37. After a short continuance, a telephonic hearing on the Motion was held on May 7, 2020, before Judge Kronstadt. See ECF No. 75 (continuance); ECF No. 91 (minute order). On May 11, 2020, the First Amended Complaint was filed. See ECF No. 96 (“FAC”). On May 18, 2020, this action and the Related Action were transferred to this Court. See ECF No. 103. On May 27, 2020, the Second Amended Complaint was filed. See ECF No. 129 (“SAC”). On June 17, 2020, an order issued that directed the parties to file a joint report regarding mootness. ECF No. 169. The parties timely filed a joint report (the “Joint Report”). See ECF No. 175 (redacted); ECF No. 174-1 (sealed). The Motion for Preliminary Injunction 1s now before the Court. Having considered the parties’ arguments, the submission in support thereof, the Joint Report, and the transcript of the May 7, 2020 hearing, the Motion is DENIED. I. BACKGROUND A. Eko’s Claimed Trade Secret and Initial Disclosure (1) Mobile Device Optimized RTS and the Eko ‘765 Patent Eko calls its clarmed trade secret Mobile Device Optimized Real Time Switching (“Mobile Device Optimized RTS”). Motion at 6. Eko’s claimed innovation is the

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA CIVIL MINUTES — GENERAL ‘O’ Case No. CV20-2299-CAS (SKx) Date July 13, 2020 Title JBF Interlude 2009 Ltd - Israel v. Quibi Holdings, LLC

combination of a method to Declaration of Tal Zubalsky (“Zubalsky Decl.”) 4 8, ECF No. 76-11 (sealed), ECF No. 77- 11 (redacted).

Id. Because this method , Which is not ideal for mobile device use, Eko “optimized” this method

Id. □ 10. Plaintiff's technical expert, Sandeep Chatterjee, explains that Eko’s method

Declaration of Sandeep Chatterjee (“Chatterjee Decl.”’) □ 18, ECE No. 76-17 (sealed), ECF No. 77-17 (redacted). Eko obtained United States Patent No. 10,460,765 (the “Eko ‘765 Patent”). See Zubalsky Decl., Ex. 1, ECF No. 77-12. The abstract of the Eko ‘765 Patent describes “Ts}ystems and methods for providing adaptive and responsive media”: In various implementations, a video for playback is received at a user device having a plurality of associated properties. Based on at least one of the properties, a first state of the video is configured, and the video is presented according to the first state. During playback of the video, a change in one of the device properties is detected, and the video is seamlessly transitioned to a second state based on the change. Eko ‘765 Patent at 2. Zubalsky, Eko’s current Chief Product Officer, states that Eko’s claimed trade secret is a Zubalsky Decl. 18; see also Declaration of Yoni Bloch (“Bloch Decl.”) §.17, ECF No. 76-2 (sealed), ECF No. 77-2 (redacted). Chatterjee states that the Eko ‘765 Patent discloses that multiple video streams can be “combined together in container structures with associated metadata” and downloaded simultaneously, but it “does not disclose or otherwise teach how the video streams can be

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA CIVIL MINUTES — GENERAL ‘Oo’ Case No. CV20-2299-CAS (SKx) Date July 13, 2020 Title JBF Interlude 2009 Ltd - Israel v. Quibi Holdings, LLC

combined using optimized RTS; then-existing methods may be used.” Chatterjee Decl. (emphasis in original). Chatterjee continues to explain that “[o|]ne way that Eko performs Interlude Media Container .” Id. § 22. Chatterjee identifies two “optimizations” of Eko’s technology:

Id. § 26. (2) Eko and Snap From 2014 through early 2018, Eko was in discussions with Snapchat, Inc. (“Snapchat”) about forming a partnership for distribution of content on Snapchat’s platform. Zubalsky Decl. 12, 21. In December 2015, Eko and Snapchat executed a mutual nondisclosure agreement (the “Snapchat NDA”). Id. § 13; Bloch Decl., Ex. 1, ECF No. 76-3 (sealed). Zubalsky states that Eko shared proprietary and confidential information with Snapchat employees, including its claimed trade secret technology in a manner that would permit Snapchat employees to understand its technical methods. Zubalsky Decl. 4] 15-20. Current Quibi employees who worked at Snapchat with Eko deny that any trade secrets or proprietary information was disclosed to them. Declaration of Clifton (C.J.) Smith (“Smith Decl.”) § 8, ECF No. 80-12 (sealed), ECF No. 81-12 (redacted); Declaration of Joseph Burfitt (“Burfitt Decl.”) | 7, ECF No. 80-15 (sealed), ECF No. 81-15 (redacted); Declaration of Daniel Szeto (“Szeto Decl.) 49, ECF No.

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