Activist hedge fund Elliott Management Corp. is wading into the legal fight between Hollywood streamer Quibi and its New York rival Eko.
New York-based Elliott will fund tech company Eko’s lawsuit against Quibi in exchange for equity, according to a person familiar with the matter who declined to be identified because the deal has not been finalized.
Eko sued Quibi in March, accusing Quibi employees of misappropriating trade secrets and that Quibi’s “turnstyle” feature on its app infringed on Eko’s patent. “Turnstyle” allows Quibi users to shift the perspective they see on a video by turning their phones horizontally or vertically.
Quibi said it did not infringe on Eko’s patent and that “turnstyle” was created by its own engineering team. Quibi has also filed court documents asking a federal court in L.A. to issue a declaratory judgment on the subject.
“When a new product launches, these types of claims are unfortunately too common,” Quibi said in a statement on Monday. “Eko’s actions and complaints remain meritless.”
Quibi, led by studio mogul Jeffrey Katzenberg and tech veteran Meg Whitman, launched its subscription streaming service in April in the midst of a pandemic. The company canceled a red carpet event due to concerns about COVID-19 and adjusted shows like “The Nod With Brittany & Eric” to be filmed from home.
The company has more than 3.1 million downloads of its app and has raised $1.75 billion in investment.
Elliott Management Corp. has invested in other companies, including Twitter and AT&T. The firm pressured companies including AT&T to make changes to their business, such as selling underperforming assets.
The Wall Street Journal first reported Elliott’s investment in Eko’s lawsuit.