Interserve, Inc. et al v. Fusion Garage PTE. LTD

Filing 46

CASE MANAGEMENT STATEMENT filed by CrunchPad, Inc., Fusion Garage PTE. LTD, Interserve, Inc.. (Scherb, Matthew) (Filed on 4/2/2010)

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Andrew P. Bridges (SBN: 122761) [e-mail] David S. Bloch (SBN: 184530) [e-mail] Matthew Scherb (SBN: 237461) [e-mail] WINSTON & STRAWN LLP 101 California Street San Francisco, CA 94111-5802 Telephone: [phone] Facsimile: [phone] Attorneys for Plaintiffs INTERSERVE, INC. dba TECHCRUNCH and CRUNCHPAD, INC. UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA

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JOINT CASE MANAGEMENT CONFERENCE STATEMENT

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INTERSERVE, INC. dba TECHCRUNCH, a Delaware corporation, and CRUNCHPAD, INC., a Delaware corporation, Plaintiffs, vs. FUSION GARAGE PTE. LTD., a Singapore company, Defendant.

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Case No. C 09-cv-5812 RS (PVT) JOINT CASE MANAGEMENT CONFERENCE STATEMENT [Pursuant to Reassignment Order of March 18, 2010]

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Pursuant to the March 18, 2010, order reassigning this case to Judge Seeborg, the parties provide the Court with the following information: 1. Date case was filed

Plaintiffs filed this case on December 10, 2009. 2. List or description of all parties Plaintiffs: INTERSERVE, INC. dba TECHCRUNCH, a Delaware corporation CRUNCHPAD, INC., a Delaware corporation Defendant: FUSION GARAGE PTE. LTD., a Singapore company 3. Summary of all claims, counter-claims, cross-claims, third party claims

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Winston & Strawn LLP

Plaintiffs allege the following claims for relief against Defendant: 1. 2. 3. 4. 5. False advertising under the Lanham Act, 15 U.S.C. § 1125; Breach of fiduciary duty under California state law; Misappropriation of business ideas under California state law; Fraud and deceit under California state law; Unlawful, unfair, or fraudulent business practices and false advertising under Cal. Bus. & Prof. C. §§ 17200 and 17500. There are no other claims presently in the case. Defendant may assert counterclaims if the case proceeds past the motion to dismiss stage. 4. Brief description of the event underlying the action; A. TechCrunch's Statement

For more than a year, Plaintiffs (also collectively "TechCrunch") worked with Defendant (also "Fusion Garage") in a joint venture to develop the "CrunchPad," an affordable, portable webbrowsing tablet computer. TechCrunch had conceived the CrunchPad device, independently developed its original prototype, and contributed substantial intellectual and financial resources at all stages of the product's development and preparation for launch. In reliance on the parties' proclaimed partnership, TechCrunch eschewed other partnerships, invested over $400,000, fronted 2
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costs to Fusion Garage, and even brought Fusion Garage staff to its Silicon Valley offices to push forward on the project. Three days before the product's scheduled launch, in November of 2009, Fusion Garage abruptly terminated its relationship with TechCrunch and announced that it would sell the CrunchPad on its own under the name "JooJoo." It started taking pre-orders the week TechCrunch sued. The evidence uncovered to date suggests that Fusion Garage planned to push TechCrunch out of the CrunchPad project months before it actually pulled the plug. Throughout October and November of 2009, TechCrunch believed that a company called Pegatron would be manufacturing the CrunchPad. But it has since discovered that Pegatron terminated its relationship with Fusion Garage on October 9--a fact Fusion Garage concealed from TechCrunch even as Fusion Garage personnel set up shop at TechCrunch's headquarters. Fusion Garage registered the domain "thejoojoo.com" on November 10, 2009, even while assuring TechCrunch in writing on November 13, 2009 that it would meet the November 20 launch date for the CrunchPad. Further, Fusion Garage's public relations firm was ready with a choreographed smear campaign against TechCrunch by the December 7, 2009, JooJoo launch event. At the event, Fusion Garage's CEO made multiple false and misleading statements about the nature, characteristics, and qualities of the CrunchPad/JooJoo device and TechCrunch's relationship to the product. Fusion Garage represented that it "developed the hardware platform on our own," and "made all the hardware design decisions for the final prototype and getting a successful contractual relationship with an ODM." It also represented that "[i]t was the Fusion Garage shareholders who have provided the necessary funds" for the CrunchPad project. Fusion Garage repeatedly asserted that it took "all the risk" in the endeavor, "did all the work needed to move forward and bring the product to market," and undertook "all of the physical and intellectual business actions required to take the product to market." These statements were false. Fusion Garage misled TechCrunch, and has been misleading the public about the nature of the CrunchPad/JooJoo device.

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Winston & Strawn LLP

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B.

Fusion Garage's Statement

Plaintiff TechCrunch is an Internet "blog" founded by blogger Michael Arrington. Mr. Arrington formed another company, Plaintiff CrunchPad, Inc. to acquire Fusion Garage. The parties were never able to come to terms on an acquisition and never signed a deal. Spurned and embarrassed that they have no product and could not consummate an acquisition, TechCrunch and Mr. Arrington filed this lawsuit to disrupt Fusion Garage's introduction of its product to the market. Plaintiffs have simultaneously engaged in a public relations campaign through the TechCrunch blog to derail Fusion Garage's business. Plaintiffs are focused on systematically publishing information about this lawsuit and Fusion Garage to try and tarnish and embarrass Fusion Garage and run it out of business. Plaintiffs allege that Mr. Arrington posted on the Internet a "challenge to himself and the world" in July 2008 to develop a web tablet. TechCrunch now claims that it owns the ethereal "ideas" related to the web tablet. In fact, TechCrunch and Arrington made no contribution to Fusion Garage's product. They contributed no technology to Fusion Garage's product. Moreover, TechCrunch has no competing product. In discovery, TechCrunch has disavowed any intellectual property infringement claim. Plaintiffs allege that the parties were partners or joint venturers in connection with developing a web tablet product. However, Plaintiffs do not allege the existence of any partnership agreement, joint venture agreement, or any contract between the parties. In acquisition discussions, Plaintiffs proposed a Letter of Intent containing a "no shop" provision meaning Fusion Garage was free to shop itself to others if the parties did not consummate an acquisition within 60 days. Such a provision is utterly incongruous with Plaintiffs' claim that they were partners with Fusion Garage. Nor have Plaintiffs explained what the terms of the supposed partnership were. Mr. Arrington has filed a declaration in support of preliminary injunction motion in which he claims the parties agreed to bear their own losses and expenses if the project was "not successful," but would share the profits if the project was successful. Accordingly, Plaintiffs' position is that there was a partnership if there was an upside to TechCrunch, but no partnership if there was a downside to TechCrunch. Moreover, Mr. Arrington apparently claims he had the right to terminate the supposed 4
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partnership at any time. The damages Plaintiffs seek are also inconsistent with their partnership allegations: they claim they are entitled to Fusion Garage's profits while claiming the parties are partners. Plaintiffs have also produced documentation suggesting they were considering trying to drive Fusion Garage out of business and solicit Fusion Garage's employees while now claiming they were partners with Fusion Garage. There was no partnership. Given the lack of any legal relationship between the parties, Plaintiffs have asserted claims based on vague and non-specific allegations, including: "misappropriation of business ideas," false advertising under the Lanham Act, breach of fiduciary duty, fraud, and violations of California Business & Professional Code §§ 17200 and 17500. These claims are all baseless and were brought for an improper purpose. Fusion Garage has moved to dismiss all of them. Plaintiffs have also filed a motion for preliminary injunction claiming they want Fusion Garage's revenues to be impounded in a Court directed account. The apparent purpose for this motion is to discover Fusion Garage's financing sources so Plaintiffs can subpoena them, pressure them, and disrupt Fusion Garage's relationships with them. 5. Description of relief sought and damages claimed with an explanation as to how damages are computed A. TechCrunch Statement

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Winston & Strawn LLP

At this time, Plaintiffs do not have a complete calculation of damages to which they may be entitled, because Plaintiffs believe that their calculation of damages is in part dependent on information to be obtained from discovery during the course of this action. But Plaintiffs are aware of at least the following damages: 1. $400,000 in actual damages related to Plaintiffs' investment in the CrunchPad project; and 2. Approximately $40,000 in proceeds from Defendant's sale of the

CrunchPad/JooJoo, of which Defendants are entitled to at least a portion. As stated in Plaintiffs' Complaint and Prayer for Relief, Plaintiffs seek, to the full extent the law permits, all actual damages, exemplary damages, Defendant's profits, restitution, and attorneys' fees and costs. 5
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B.

Fusion Garage Statement

As Fusion Garage contends that none of Plaintiffs' claims have any merit, there are no damages. 6. Status of discovery (including any limits or cutoff dates)

On January 7, 2010, the Court granted TechCrunch's motion for expedited discovery. The parties have exchanged their initial disclosures. To date, TechCrunch has served one set of interrogatories (nos. 1-12), and two sets of requests for production of documents. TechCrunch has also served subpoenas upon third parties PayPal, Inc., McGrath Power, and Fusion Garage, Inc. TechCrunch is working with Fusion Garage to arrange for the deposition of its principal. To date, Fusion Garage has served one set of requests for production jointly on both Plaintiffs and one set of interrogatories separately on each Plaintiff. Fusion Garage has noticed the deposition of Interserve, Inc., and has subpoenaed third part Ron Conway for documents and deposition. The Court has not yet held any scheduling conference in this case and there are currently no case-specific limits on discovery or a discovery cutoff. 7. Procedural history of the case including previous motions decided and/or submitted, ADR proceedings or settlement conferences scheduled or concluded, appellate proceedings pending or concluded, and any previous referral to a magistrate judge

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Winston & Strawn LLP

Prior and pending motions include: Plaintiffs' Motion for Expedited Discovery (Dkt. 11) Defendant's Motion to Dismiss (Dkt. 20) Granted on January 7, 2010. Pending. Hearing was set before Judge Ware for May 3, 2010, but that hearing date was vacated. Hearing is now set before Judge Seeborg for May 6, 2010. Pending. Hearing was before Magistrate Judge Trumbull on March 16, 2010. The parties await a ruling. Pending. Hearing was set before Judge Ware for May 3, 2010, and then before

Defendant's Motion for Protective Order (Dkt. 23)

Plaintiffs' Motion for Preliminary Injunction (Dkt. 26) 6

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Plaintiffs' Motion to Change Hearing on Preliminary Injunction Motion (Dkt. 27) Defendant's Motion to Reset Preliminary Injunction Hearing to May 6, 2010 (Dkt. 40) Defendant's Motion to Reset the Preliminary Injunction Hearing to May 27, 2010 (Dkt 42).

Judge Seeborg on April 29, but those hearing dates were vacated. Hearing is now set before Judge Seeborg for May 6, 2010. Denied on March 10, 2010. Granted. Denie d

There has been no settlement or ADR proceedings or appellate practice. This case remains referred to Magistrate Judge Trumbull for discovery matters. 8. Other deadlines in place (before reassignment), including those for dispositive motions, pretrial conferences, and trials

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The Court previously set May 3, 2010, for the Initial Case Management Conference. 9. Any requested modification of these dates and reason for the request

Winston & Strawn LLP

As the Court has set a May 6, 2010, hearing date for Defendant's Motion to Dismiss, to Strike and for a More Definite Statement and Plaintiffs' Motion for Preliminary Injunction, the parties respectfully request that the Court set a Case Management Conference on that date. 10. Whether the parties will consent to a magistrate judge for trial

The parties do not consent to a magistrate judge. 11. Whether Judge Seeborg has previously conducted a settlement conference in this case, and if so, whether the parties stipulate to him handling this case for trial pursuant to ADR Local Rule 7-2 or request his recusal;

Judge Seeborg has not previously conducted a settlement conference in this case.

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12.

If there exists an immediate need for a case management conference to be scheduled in the action.

The parties do not see an immediate need for a case management conference apart from the need for the initial case management conference to set dates. Dated: April 2, 2010 WINSTON & STRAWN LLP

By:

/ s/ Andrew P. Bridges David S. Bloch Matthew A. Scherb Attorneys for Plaintiffs INTERSERVE, INC. dba TECHCRUNCH and CRUNCHPAD, INC.

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Dated: April 2, 2010

QUINN EMANUEL URQUHART & SULLIVAN LLP By: / s/ Claude M. Stern Patrick C. Doolittle Attorneys for Defendant FUSION GARAGE PTE. LTD. CONCURRENCE IN FILING

Patrick C. Doolittle concurs in the filing of this pleading. Dated: April 2, 2010 /s/ Matthew A. Scherb