Is Hulu a stolen idea? Arbitration to decide

A Los Angeles County judge on Thursday referred to arbitration the case of a Canadian engineer who contends that NBC Universal stole his idea and business strategy to launch Hulu, the website that shows TV programs and movies.

Errol Hula, founder of technology company Hulavision, sued media giant NBC Universal and the Hulu joint venture four months ago, saying Hula shared trade secrets and a business plan with an NBC executive in 2006. The following year, NBC Universal announced plans to team up with Rupert Murdoch’s News Corp. to create a website, which blossomed into a venture named Hulu that now is the second-most-popular video website, behind Google Inc.’s YouTube.

Hula, who lives near Vancouver, Canada, said in the complaint that he met with Raymond Vergel de Dios, NBC’s director of business development, at a TV industry trade show in Las Vegas in January 2006. The complaint said, “Mr. Vergel de Dios expressed interest in Mr. Hula’s plans and invited him to submit his confidential information to NBC.”

But before Hula would relay the information to NBC, in an effort “to explore the possibility of a business arrangement,” Hula required that Vergel de Dios sign a nondisclosure agreement. A contract was struck in May 2006, and Hula provided NBC with an 18-page PowerPoint presentation which described his strategic plans, marketing strategy and technology.

“At no time did Mr. Vergel de Dios inform Hula of any potential plans NBC had of its own for the development of any project similar to Hula’s or that it had any interest other than possibly to form a business relationship with Hula,” the lawsuit said. The two men discussed the plans for several weeks. Then, according to the suit, in June 2006, Vergel de Dios stopped returning Hula’s calls.

NBC Universal and News Corp. announced their joint venture in March 2007. That summer, the name “Hulu” was unveiled for the website. At the time, the joint venture management said the name Hulu was selected because it was meaningless, easy to spell and “rhymes with itself.”

Hula and his attorney aren’t buying it.

“It’s not a coincidence that the name of the website is so close to my client’s name,” Robert M. Vantress, a San Jose attorney who is representing Hula, said after Thursday’s hearing. “There are many similarities between the information my client gave NBC and what they used to create Hulu. Everything that they have been doing, as near as we can tell, is what we proposed.”

Attorney Henry Shields, who represents NBC Universal, dismissed Hula’s allegations that NBC stole trade secrets. “The allegations are meritless,” Shields said.

Shields also said the NBC executive named in the complaint, Vergel de Dios, was not involved in the development of Hulu. “There are a lot of people who work at NBC, and this man had no relationship to the people who were working on the website,” he said.

Hulu is owned by NBC Universal, News Corp., Walt Disney Co. and the private firm Providence Equity Partners. Hula contends that the venture is now worth at least $1 billion.

Thursday’s hearing before Los Angeles County Superior Court Judge John A. Kronstadt did not explore the merits of Hula’s case. Instead, the judge settled a dispute over whether Hula and his attorney would have to participate in arbitration proceedings to resolve the matter.

NBC Universal and Hulu had argued Thursday that the case belonged in arbitration. Arbitration sessions should begin in about two weeks, said Michael Garfinkel, an attorney representing the Hulu joint venture.

meg.james@latimes.com