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

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

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CIVIL MINUTES - GENERAL ‘O’

Case No. | 2:20-CV-2299-CAS (SKx) Date July 28, 2020

2:20-CV-2250-CAS (SKx)

Title JBF INTERLUDE 2009 LTD, ET AL. v. QUIBI HOLDINGS LLC, ET AL.

QUIBI HOLDINGS LLC, ET AL. v. INTERLUDE U.S., INC., ET AL.

Present: The Honorable CHRISTINA A. SNYDER

Catherine Jeang Not Present N/A

Deputy Clerk Court Reporter / Recorder Tape No.

Attorneys Present for Plaintiffs: Attomeys Present for Defendants:

Not Present Not Present

Proceedings: [REDACTED] - CHAMBERS) - EKO’S MOTION TO

DISMISS QUIBI’S FIRST AMENDED COMPLAINT, OR IN THE

ALTERNATIVE, TO CONSOLIDATE (Case No. 2:20cv02250

ECF No. 39-1, filed May 26, 2020)

QUIBI’S MOTION TO DISMISS EKO’S SECOND AMENDED

COMPLAINT (Case No. 2:20cv02299 ECF No. 149, filed June 1,

2020)

I. INTRODUCTION

These actions concern a dispute over the ownership and use of technology used to

stream interactive video through mobile devices, like smartphones and tablets, in different

visual orientations simultaneously.

Quibi Holdings LLC (“Quibi”) filed the first-filed action on March 9, 2020, see Case

No. 2250 (“Quibi ECF”) No. 1, and the operative first amended complaint on May 12,

2020, see Quibi. ECF No. 25 (“Quibi FAC”). Quibi’s first amended complaint requests

(1) a declaration of non-infringement of all claims of U.S. Patent No. 10,460,765 (“the

°765 patent”) owned by Interlude US, Inc. and its parent company JBF Interlude 2009 Ltd.,

which together do business under the brand name Eko, as well as (2) a declaration that

Quibi has not misappropriated any trade secret from Eko. See Quibi FAC 4§ 34-57.

Eko filed a separate action against Quibi on March 10, 2020. See Case No. 2299

(“Eko ECF”) No. 1. On May 27, 2020, Eko filed the operative second amended complaint,

which added Quibi executive Jeffrey Katzenberg and Quibi employees Clifton J. Smith,

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Case No. 2:20-CV-2299-CAS (SKx) Date July 28, 2020

2:20-CV-2250-CAS (SKx)

Title JBF INTERLUDE 2009 LTD, ET AL. v. QUIBI HOLDINGS LLC, ET AL.

QUIBI HOLDINGS LLC, ET AL. v. INTERLUDE U.S., INC., ET AL.

Joseph Burfitt, Robert A. Post, Jr., Blake Barnes, and Eric Buehl as co-defendants. See

Eko ECF No. 129 (“Eko SAC”). The second amended complaint alleges nine claims for

relief: (1) breach of implied contract for idea submission under California law against

Katzenberg and Quibi; (2) misappropriation of trade secrets pursuant to the federal Defend

Trade Secrets Act (“DTSA”), 18 U.S.C. § 1839 et seq., against Quibi, Smith, and Burfitt:

(3) infringement of the ’765 patent against Quibi; (4) infringement of U.S. Patent No.

8,600,220 (“the °220 patent’) against Quibi; (5) infringement of U.S. Patent No.

10,418,066 (“the ’066 patent’) against Quibi; (6) breach of contract related to a non-

disclosure agreement against Quibi, Smith, and Burfitt; (7) unfair competition in violation

of the Lanham Act, 15 U.S.C. § 1125(a), against Quibi; (8) correction of inventorship as

to U.S. Patent No. 10,554,926 (“the 926 patent’), pursuant to 35 U.S.C. § 256, against all

defendants except Katzenberg; and (9) declaratory judgment as to ownership of the □□□

patent, against Quibi. See Eko SAC 58-161.

On July 6, 2020, the Court denied Eko’s motion for a preliminary injunction, without

addressing the merits of Eko’s underlying claims, on grounds that Eko had not presented

facts sufficient to establish irreparable injury. See Eko ECF No. __ (forthcoming pending

redactions).

Eko filed its instant motion to dismiss Quibi’s first amended complaint, or in the

alternative, to consolidate the two pending actions on May 26, 2020. See Quibi ECF No.

39-1 (“Eko MTD”). Quibi filed an opposition on June 22, 2020. See Quibi ECF No. 42

(“Quibi MTD Opp.”). Eko filed a reply on June 29, 2020. See Quibi ECF No. 43 (“Eko

MTD Reply”).

Quibi filed its instant motion to dismiss Eko’s second amended complaint on June

1, 2020. See Eko ECF No. 149 (“Quibi MTD”). Eko filed an opposition on June 18, 2020.

See Eko ECF No. 171-1 (“Eko MTD Opp.”). Quibi filed a reply on June 29, 2020. See

Eko ECF No. 183 (“Qubi MTD Reply”). The Court held a hearing on July 13, 2020.

Having considered the parties’ pleadings and submissions, the Court concludes as

follows.

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Case No. 2:20-CV-2299-CAS (SKx) Date July 28, 2020

2:20-CV-2250-CAS (SKx)

Title JBF INTERLUDE 2009 LTD, ET AL. v. QUIBI HOLDINGS LLC, ET AL.

QUIBI HOLDINGS LLC, ET AL. v. INTERLUDE U.S., INC., ET AL.

RELEVANT FACTS ALLEGED

Unless otherwise indicated, the Court accepts the truth of the parties’ respective

allegations for the purpose of resolving the pending motions to dismiss those allegations.’

A. Eko’s Claimed Rotation Technology

Eko is a media and technology company that provides an interactive video platform

designed to be viewed on mobile devices. Eko SAC 9 16. In 2012, Eko claims it began

developing technology that allows mobile device users to seamlessly transition between

viewing mobile videos in either the vertical “portrait” or horizontal “landscape” orientation

of their device, while still filling full screen space in either orientation. Id. [24-25 (the

“rotation technology”). The rotation technology delivers different video content depending

on the user’s selected orientation. Id. Eko alleges that the ideas behind the rotation

technology are the subject of the ’765 patent, the ’220 patent, and the ’066 patent (the “Eko

patents”) that Eko applied for and obtained between 2012 and 2019. See id. J] 19-22.

Eko claims that one method to implement the ideas behind the rotation technology,

not disclosed in the Eko patents, is what it calls its Optimized Real Time Switchin ¢

“ORTS”) method. Id. {| 27. Eko claims that its ORTS method 1s a trade secret that

Id. Eko alleges that it has

taken a number of steps to protect the trade secret information underlying the ORTS

method, including storing its source code on password protected servers, limiting

disclosure, and requiring persons to whom the method is disclosed to sign non-disclosure

agreements. Id. 18.

! The ensuing narrative draws principally from the facts alleged in Eko’s seconded

amended complaint, since Quibi’s motion to dismiss targets the sufficiency of those

allegations, whereas Eko’s motion to dismiss tums upon the Court’s discretion pursuant to

the Declaratory Judgment Act, and not the adequacy of what Quibi has pled.

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Case No. 2:20-CV-2299-CAS (SKx) Date July 28, 2020

2:20-CV-2250-CAS (SKx)

Title JBF INTERLUDE 2009 LTD, ET AL. v. QUIBI HOLDINGS LLC, ET AL.

QUIBI HOLDINGS LLC, ET AL. v. INTERLUDE U:S., INC., ET AL.

B. Eko Meets with Katzenberg in March 2017

Katzenberg and other investors founded Quibi in October 2017. Id, 4 3, 9, 30.

Quibi operates a mobile device application that streams short “quick bite” videos to users.

Id. | 24. On March 22, 2017, prior to Quibi’s founding, Eko’s co-founder Yoni Bloch met

with Katzenberg allegedly to demonstrate Eko’s non-confidential rotation technology. Id.

9128, 59. Eko claims that the purpose of the meeting was to pitch Katzenberg on

purchasing, or licensing, the rotation technology from Eko. Id,

Following their March 22, 2017 meeting, Katzenberg wrote to Bloch stating that he

was “excited to learn about your business and get the chance to see some of the amazing

products you’ve already created.” Id. 428, Ex. 4. “As discussed,” Katzenberg continued,

what my partners and I are building at |Quibi] and assuming it makes sense to you,

I’m happy to continue the conversation.” Id. Katzenberg then asked Bloch for “a deck

and any materials” he could “share with” his partners about the demonstrated rotation

technology. Id. Bloch sent Katzenberg the materials he requested. Id. § 29, Ex. 4.

Specifically, Bloch sent Katzenberg what Eko claims were non-confidential materials

including video clips of mobile devices demonstrating the patented rotation technology.

Id, Quibi did not ultimately purchase or license the rotation technology from Eko in 2017.

Id. 30.

C. Eko Meets with Smith and Burfitt from Quibi in March 2019

Despite not completing a deal for Eko’s rotation technology in 2017, Eko alleges

that Quibi remained interested in integrating the rotation technology (or its functional

equivalent) into Quibi’s mobile application. Id. fj 31-32. In March 2019, Quibi employees

Smith and Burfitt met with Eko executives at Eko’s office in New York, allegedly to

discuss licensing Eko’s rotation technology to Quibi. Id. ] 32. According to Eko, Quibi

had previously represented that Quibi had not developed, or obtained, any technology that

provides the sort of user experience and functionality provided by Eko’s rotation

technology. Id. { 32.

Before beginning the meeting in New York, Smith and Burfitt signed non-disclosure

agreements with Eko promising to keep confidential, and not to use, any confidential

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□□□ 2:20-CV-2299-CAS (SKx) Date July 28, 2020

2:20-CV-2250-CAS (SKx)

Title JBF INTERLUDE 2009 LTD, ET AL. v. QUIBI HOLDINGS LLC, ET AL.

QUIBI HOLDINGS LLC, ET AL. v. INTERLUDE U‘S., INC., ET AL.

information disclosed by Eko dunng the course of the meeting. Id. { 47, Exs. 5 & 6 (the

“Quibi NDA”). Specifically, the Qubi NDA states that it applies to “any disclosure of any

Confidential Information to be made” after the agreements were signed. Id., Exs. 5 & 6 at

1 and § 3.3. Eko does not allege what, if any, confidential information it disclosed to Smith

or Burfitt at this meeting.

At some point during the meeting with Eko, Smith and Burfitt demonstrated for Eko

the user experience that Quibi intended to offer in its forthcoming mobile application. The

demonstration showed videos on mobile devices that would appear to transition between

landscape and portrait mode while still filling the whole screen. Id. □□ 33, 47. According

to Eko, Smith and Burfitt described the demonstration as a simulation intended to impress

and attract investors, and represented that Quibi did not actually possess the technology.

Id, 33. Eko believed the demonstration appeared to deploy the invention claimed in Eko’s

patent, reminded Quibi that it had patented and patent-pending applications covering

the technology, and insisted that Quibi would need a license to use it. Id.

D. Eko Previously Disclosed The ORTS Method to Smith and Burfitt in 2015

Prior to meeting with Smith and Burfitt at Eko’s New York offices in March 2019,

Eko representatives met with Smith and Burfitt m December 2015, when the pair was

employed by Snapchat, Inc. Id. §{ 36. Smith and Burfitt signed a non-disclosure agreement

with Eko at that meeting. Id. {| 36 (the “Snapchat NDA”). The Snapchat NDA required

Burfitt and Smith

Id. e Snapchat NDA also states that

Id.

Subject to the protections of the Snapchat NDA, Eko alleges that it disclosed its

ORTS method to Smith and Burfitt, and subsequently collaborated with Smith and Burfitt

on projects involving the ORTS method for some time thereafter. Id. { 38. In particular,

Eko alleges that Smith and Burfitt participated in Eko-hosted workshops that disclosed the

technology underlying the ORTS method, and taught Smith and Burfitt how the ORTS

method works. Id. Eko alleges that Smith and Burfitt also received links to demonstrative

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Case No. 2:20-CV-2299-CAS (SKx) Date July 28, 2020

2:20-CV-2250-CAS (SKx)

Title JBF INTERLUDE 2009 LTD, ET AL. v. QUIBI HOLDINGS LLC, ET AL.

QUIBI HOLDINGS LLC, ET AL. v. INTERLUDE U‘S., INC., ET AL.

videos that would have enabled Smith and Burfitt to obtain, understand, and use the ORTS

method on their own. Id.

Smith and Burfitt left Snapchat and joined Quibi in October 2018. Id, J 41, 43.

E. Quibi Debuts Turnstyle in January 2020, And Launches in April 2020

According to Eko, Quibi did not possess anything like Eko’s rotation technology

prior to hiring Smith and Burfitt in October 2018. Id, Following Smith and Burfitt’s

arrival in October 2018, however, Eko claims that Quibi began to prioritize developing

such a technology that it would come to call “Turnstyle.” Id, 445. Eko alleges that Quibi

developers presented the idea for the Turnstyle rotation technology to the Quibi board of

directors ata November 8, 2018 board meeting, and created a prototype that was operable

in February 2019. Id. Quibi applied for the °926 patent for the Turnstyle technology on

May 19, 2019 and received the patent on February 20, 2020. According to Eko, Quibi’s

development of Turnstyle relied upon the use of Eko trade secrets (including the ORTS

method) and other confidential information that Eko had previously disclosed to Smith and

Burfitt subject to the Snapchat NDA, as well as other non-confidential information that

Smith Burfitt acquired from their prior collaboration with Eko. Id, 50. Eko alleges a

host of similarities between the °926 patent filed by Quibi and the earlier-filed ’765 patent

filed by Eko. Id. □□□ 50, 140-44.

Eko discovered that Quibi had developed Turnstyle at the January 2020 CES trade

show in Las Vegas, Nevada. Id. §] 34. The day before Quibi was due to present a

demonstration of its platform in a keynote presentation to the trade show, Eko and Quibi

representatives held a meeting in which Quibi would not reveal what Quibi intended to

present. Id, At the keynote presentation, Eko watched as Quibi demonstrated the Turnstyle

feature, which, according to Eko, appeared to imitate Eko’s rotation technology in every

material respect. Id.

Eko thereafter notified Quibi of its suspected infringement and misappropriation,

and spent the next several weeks attempting to resolve the dispute out of court. Id. □ 52-

55. With no resolution in place, Quibi launched its mobile application, featuring Turnstyle

and the disputed technology, on April 6, 2020. Id. 56. At that time, Eko claims that

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Case No. 2:20-CV-2299-CAS (SKx) Date July 28, 2020

2:20-CV-2250-CAS (SKx)

Title JBF INTERLUDE 2009 LTD, ET AL. v. QUIBI HOLDINGS LLC, ET AL.

QUIBI HOLDINGS LLC, ET AL. v. INTERLUDE USS., INC., ET AL.

Quibi also changed its logo from the letter Q placed on a black background with a blue-to-

red gradient and a wordmark to a white letter Q placed inside a purple square that, Eko

alleges, is similar to its own logo featuring its wordmark over a purple square:

According to Eko, the similarity has confused customers about Eko’s connection to

Quibi, and about the ownership and provision of Eko’s products and services more

generally. Id. 4 56.

LEGAL STANDARD

A motion pursuant to Federal Rule of Civil Procedure 12(b)(6) tests the legal

sufficiency of the claims asserted in a complaint. Under this Rule, a district court properly

dismisses a claim if “there 1s a ‘lack of a cognizable legal theory or the absence of sufficient

facts alleged under a cognizable legal theory.’” Conservation Force v. Salazar, 646 F.3d

1240, 1242 (9th Cir. 2011) (quoting Balisteri v. Pacifica Police Dep’t, 901 F.2d 696, 699

(9th Cir. 1988)). “While a complaint attacked by a Rule 12(b)(6) motion to dismiss does

not need detailed factual allegations, a plaintiff's obligation to provide the ‘grounds’ of his

‘entitlement to relief requires more than labels and conclusions, and a formulaic recitation

of the elements of a cause of action will not do.” Bell Atlantic Corp. v. Twombly, 550

U.S. 544, 555 (2007) (internal citations omitted). “Factual allegations must be enough to

raise a right to relief above the speculative level.” Id. (internal citations omitted).

In considering a motion pursuant to Rule 12(b)(6), a court must accept as true all

material allegations in the complaint, as well as all reasonable inferences to be drawn from

them. Pareto v. FDIC, 139 F.3d 696, 699 (9th Cir. 1998). The complaint must be read in

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Case No. 2:20-CV-2299-CAS (SKx) Date July 28, 2020

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Title JBF INTERLUDE 2009 LTD, ET AL. v. QUIBI HOLDINGS LLC, ET AL.

QUIBI HOLDINGS LLC, ET AL. v. INTERLUDE U‘S., INC., ET AL.

the light most favorable to the nonmoving party. Sprewell v. Golden State Warriors, 266

F.3d 979, 988 (9th Cir. 2001). However, “a court considering a motion to dismiss can

choose to begin by identifying pleadings that, because they are no more than conclusions,

are not entitled to the assumption of truth. While legal conclusions can provide the

framework of a complaint, they must be supported by factual allegations.” Ashcroft v.

Igbal, 556 U.S. 662, 679 (2009): see also Moss v. United States Secret Service, 572 F.3d

962, 969 (9th Cir. 2009) (“[F]or a complaint to survive a motion to dismiss, the non-

conclusory ‘factual content,’ and reasonable inferences from that content, must be

plausibly suggestive of a claim entitling the plaintiff to relief.”). Ultimately,

“(d]jetermining whether a complaint states a plausible claim for relief will . . . be a context-

specific task that requires the reviewing court to draw on its judicial experience and

common sense.” Igbal, 556 U.S. at 679.

IV. DISCUSSION

The parties’ respective motions to dismiss are now before the Court. The Court

addresses each in turn.

A. — Eko’s Motion To Dismiss, Or In The Alternative, To Consolidate

Eko moves to dismiss Quibi’s first-filed Declaratory Judgement Act claim, which

asks the Court to declare that Quibi did not infringe on Eko’s ‘765 patent and did not

misappropriate Eko’s trade secrets. Eko’s motion to dismiss asserts that the Court should

eXercise its discretion to dismiss this action in the interest of judicial and litigant economy,

and the just and effective disposition of disputes. See Eko MTD at 1-8. Eko further argues

that Quibi’s action was purely anticipatory, and that the Court has additional discretion to

dismiss on that basis. Id. at 8.

In response, Quibi asserts that its action was first-filed, which weighs against

dismissal. See Quibi MTD Opp. at 5-6. In addition, Quibi contests that it would be in the

interest of judicial economy to sustain their action, given that it raises issues that Eko’s

subsequent action does not. Id, at 1. And Quibi also disputes that its action was purely

anticipatory. Id. at 6-7.

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Case No. 2:20-CV-2299-CAS (SKx) Date July 28, 2020

2:20-CV-2250-CAS (SKx)

Title JBF INTERLUDE 2009 LTD, ET AL. v. QUIBI HOLDINGS LLC, ET AL.

QUIBI HOLDINGS LLC, ET AL. v. INTERLUDE U‘S., INC., ET AL.

The Court agrees with Quibi. District courts have “unique and substantial

discretion” to consider actions for declaratory relief. Wilton v. Seven Falls Co., 515 US.

277, 286 (1995). In the patent context, courts considering dismissing a first-filed

declaratory action in favor of a later-filed infringement action generally maintain the first-

filed action “unless considerations of judicial and litigant economy, and the just and

effective disposition of disputes” require dismissal. Serco Services Co., L.P. v. Kelley Co.,

Inc., 51 F.3d 1037, 1039 (Fed. Cir. 1995) (internal quotations omitted) (citing Genentech,

Inc. Eli Lilly and Co., 998 F.2d 931, 937 (Fed. Cir. 1993)).

Exercising its discretion in this case, the Court finds that judicial economy does not

require dismissal of the Quibi action. This is not a case where dismissal would improve

access to witnesses or evidence. Cf. Serco, 51 F.3d at 1040 (finding that a court in the

Norther District of Texas properly dismissed an action for declaratory judgement in favor

of an action in Wisconsin, because that was where defendant’s witnesses and documents

were located). Both actions between the parties are before this Court, and though judicial

economy may for that reason counsel in favor of consolidation, it does not require

dismissal. Quibi is also correct that the status of their action as first-filed weighs against

dismissal, see Genentech, 998 F.2d at 937, and Eko does not raise a compelling basis to

overcome that consideration. While Eko contends that Quibi’s filing was purely

anticipatory, even if it were, that fact alone would not justify dismissal of the first-filed

action. See Elecs. for Imaging, Inc. v. Coyle, 394 F.3d 1341, 1348 (Fed. Cir. 2005)

(holding that dismissal of first-filed action is improper where “the court’s decision is left

to rest exclusively on the alleged anticipatory nature of [plaintiff's] suit”).

Because Eko does not identify additional compelling factors that might overcome

the presumption in favor of the first-filed action, the Court DENIES Eko’s motion to

dismiss the Quibi action altogether.

In the alternative, Eko moves to consolidate its action with Quibi’s action. See Eko

MTD at 9-10. Quibi does not oppose consolidation. See Quibi MTD Opp. at 8. Pursuant

to Rule 42(a) of the Federal Rules of Civil Procedure, the Court has discretion to join or

consolidate actions involving a common question or law or fact. Investors Research Co.

v. United States District Court for the Central District of California, 877 F.2d 777 (9th Cir.

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Case No. 2:20-CV-2299-CAS (SKx) Date July 28 2020

2:20-CV-2250-CAS (SKx)

Title JBF INTERLUDE 2009 LTD, ET AL. v. QUIBI HOLDINGS LLC, ET AL.

QUIBI HOLDINGS LLC, ET AL. v. INTERLUDE U‘S., INC., ET AL.

1989) (citing Fed. R. Civ. P. 42(a)). Courts exercising this discretion “weigh|] the interest

in judicial convenience against the potential for delay, confusion, and prejudice caused by

consolidation.” Ferguson v. Corinthian Colleges Inc., No. 11-CV-0127-DOC, 2011 WL

1519352, at *2 (C_D. Cal. Apr 15, 2011).

The Court finds that consolidation 1s appropriate here. The two actions here involve

closely related questions of law and fact, and consolidating them would promote the

interests of judicial and litigant economy without prejudicing either party or action. The

Court therefore exercises its discretion to GRANT Eko’s unopposed motion in part, and

consolidate the two actions for the purposes of pre-trial proceedings. The Court reserves

judgment as to whether to consolidate the two actions for trial.

B. Quibi’s Motion To Dismiss

Quibi moves to dismiss all nine claims for relief alleged in the second amended

complaint. The Court addresses Quibi’s motion to dismiss each claim as follows.

(1) = Implied Contract Claim

“{T ]he California Supreme Court has held that contract law may provide protection

to a person who submits an idea to others with the understanding that the idea is submitted

in consideration for a promise of payment for its use.” Jordan-Benel v. Universal City

Studios. Inc., 859 F.3d 1184, 1191 (9th Cir. 2017) (citing Desny v_ Wilder, 46 Cal. 2d 715,

735-37 (1956)). To state a Desny claim for an implied contract for idea submission under

California law, the Ninth Circuit has held that a plaintiff must allege “that the plaintiff [1]

prepared the work, [2] disclosed the work to the offeree for sale, and [3] did so under

circumstances from which it could be concluded that the offeree voluntarily accepted the

disclosure knowing the conditions on which it was tendered and the reasonable value of

the work.” Grosso v. Miramax Film Corp., 383 F.3d 965, 967 (9th Cir. 2004); see also

Montz v. Pilgrim Films & Television, Inc., 649 F.3d 975, 976 (9th Cir. 2011) (en banc)

(stating that “Grosso has firm roots in our federal law as well as in the California law’).

Eko alleges that Katzenberg and Quibi are liable for breaching an implied contract

related to Eko’s submission of its non-trade secret rotation technology at the parties’ March

22, 2017 meeting. See Eko SAC 58-64. Quibi and Katzenberg move to dismiss on

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Case No. 2:20-CV-2299-CAS (SKx) Date July 28, 2020

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Title JBF INTERLUDE 2009 LTD, ET AL. v. QUIBI HOLDINGS LLC, ET AL.

QUIBI HOLDINGS LLC, ET AL. v. INTERLUDE U.S., INC., ET AL.

grounds that (1) Eko’s patent application publicly disclosed the non-trade secret rotation

technology prior to the parties’ meeting, and (2) that Eko fails to allege that Eko offered

the rotational technology for sale, or that Katzenberg (and therefore Quibi) knew or should

have known that providing some reasonable consideration for Eko’s rotational technology

was a condition for accepting its disclosure. See Quibi MTD at 4-6.

The Court agrees with Quibi.2 Had Eko alleged facts indicating that the non-trade

secret ideas disclosed to Katzenberg at the March 22, 2017 meeting were non-public, the

Court might have inferred from the circumstances of the parties’ meeting and Katzenberg’s

subsequent e-mail to Eko that Katzenberg had accepted Eko’s disclosure “with the

understanding and expectation” that Eko “would be reasonably compensated for its use”

by Quibi. Grosso, 383 F.3d at 967; see Eko SAC {ff 25, 28-29. But that is not what Eko

alleges. As Quibi points out, Eko alleges that on March 2, 2017—nearly three weeks before

the parties” meeting—it publicly disclosed the non-trade secret aspects of its rotation

technology in the patent application for what would become the ’765 patent. Id. [20 &

Ex. ] (attaching patent application published March 2, 2017).

These facts are more akin to those at issue in Jonathan Browning, Inc. v. Venetian

Casino Resort. LLC. No. 07-CV-3983-JSW, 2007 WL 4532214 (N.D. Cal. Dec. 19, 2007).

That case involved a design firm that pitched the Venetian Casino Resort in Las Vegas to

purchase its sconces to decorate the Venetian’s hotel rooms. The Venetian did not accept

the design firm’s pitch, but the design firm later discovered that the hotel had allegedly

placed thousands of sconces closely resembling its own in its hotel rooms. The design firm

sued inter alia on a Desny theory, alleging that the Venetian should have known that the

disclosure of its sconce design was conditioned on an implied agreement by the Venetian

to provide consideration for the sconce design before using it. The court dismissed the

design firm’s claim because its complaint revealed that the firm had previously disclosed

the designs at issue “to the general public prior to submitting its bid to the Venetian.” Id.

2 At the hearing, the Court expressed an inclination to revisit this determination.

Having done so, however, the Court maintains its tentative ruling. While it might be

possible for Eko to state an idea theft claim under Desny, Eko should first plead the missing

allegations discussed in this section that address the Court’s concerns.