The Joo Joo Delay And A Summary Of The Legal Wrangle With TechCrunch

The latest news is that Fusion Garage’s Joo Joo has revamped its interface, and that though pre-ordered Joo Joos were supposed to be shipped by end Feb, a manufacturing delay means the device will only be shipped in two weeks time on 25th March.

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Manufacturing Issue Causes Delay

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The delay comes by way of a manufacturing issue discovered mid–way during the production with regards to the 12.1 inch capacitive touch screen, which is an industry first. From what is known, it seems like screen was not as sensitive as hoped to be and more fine – tuning had been required.

With the previous announcement of the Fusion Garage deal with Malaysian company, CSL, all manufacturing costs associated with the Joo Joo has been eliminated from Fusion Garage’s care. As such, Fusion Garage assures all potential customers that the company will have “no other barriers in the way of product delivery in the new timeframe”. (Cheers to that!)

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Bite-Sized Summary of the Lawsuit Between Fusion Garage and TechCrunch

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Despite the tidal wave of positivity that Fusion Garage seems to be currently riding on, the lawsuit filed by TechCrunch in December last year, looms like a bad cloud over their heads. With Fusion Garage’s Motion to Dismiss Lawsuit scheduled to be heard on the 5th of April 2010, here’s a quick summary of the legal wrangle before the jury arrives.

Lawsuit filed by TechCrunch

i. False advertising in violation of the Lanham act

TechCrunch’s rather questionable strongest claim ssentially accuses Fusion Garage of making misleading statements during its advertising and promotion of the Joo Joo. Moreover, it alleges that these falsehoods are damaging to TechCrunch and will continue to harm its reputation unless halted by court injunction.

ii. Breach of fiduciary duty

A breach of fiduciary duty takes place when both parties acted in such a manner so as to define their relationship as being “partners” in the business.

TechCrunch maintains that the dealings between both sides were sufficient enough to deem that a partnership has existed between the 2 companies. As such, Fusion Garage had a duty of loyalty to TechCrunch. Fusion Garage, however, violated fiduciary duty when it concealed important facts, made misrepresentations, and individualized the joint intellectual property.

iii. Misappropriation of business ideas

With this claim Arrington is essentially saying that the Joo Joo/CrunchPad was entirely his creation and that Fusion Garage played no part in its subsequent development.

On another note, nowhere in the lawsuit does Arrington stake claims regarding the core Intellectual Property rights of the CrunchPad which Fusion Garage might have incorporated into the Joo Joo. Instead the supporting evidence provided by Arrington only serves to trivialize their claims.

iv. Fraud and deceit

On this second count of falsehood mongering volleyed at Fusion Garage, they have been accused of making “representations which were material to the joint effort between both parties” but not having the intention to act on them.

Motion To Dismiss by Fusion Garage

To be heard on April 5th.

i. Claim under the Lanham Act fails

Fusion Garage maintains that the Lanham Act cannot be invoked since the alleged “misrepresentations” which they had made during the collaborative phase of their relationship were actually true and there was intention to fulfill theses promises made.

Furthermore, TechCrunch cannot prove that it sustained competitive injury as a result of Fusion Garage’s misrepresentation since the Joo Joo was launched after the public demise of the CrunchPad. TechCrunch was also not developing any rival tablet lines at that point of time.

Separately, the “false statements” which TechCrunch complains Fusion Garage made pertain to Fusion Garage’s involvement in the primary inventorship of the CrunchPad. These statements cannot file for claims for the Lanham Act since they do not constitute to material misrepresentations which are to be made on the nature, characteristics, qualities of the goods and commercial activities undertaken by both Fusion Garage and TechCrunch.

Finally, the invoking of the Lanham Act has been made with respect to a Michael Arrington’s (Non Party Individual) ideas. TechCrunch, the filer of the lawsuit cannot allege this false advertising claim on his behalf and in any case, such a claim cannot be made about an individual.

ii. Claim for breach of fiduciary duty fails

With Arrington having, on numerous occasions, threatened to terminate the project – “For reputational reasons, I’m forced to notify our investors the deal is off. At this point it looks like our position is to turn the project off completely”, TechCrunch surely did not seem like they were taking their relationship with Fusion Garage very seriously.

iii. Claim for misappropriation of business idea fails

Business ideas under the Californian Law are not accorded property rights. And therefore since these ideas are not considered to be property per se, they cannot be subject to common law misappropriation.

iv. Claim for fraud and deceit fails

Claim for fraud and deceit, demands specificity in terms of the time, place, and specific content of the false representations as well as the identities of the parties. However, TechCrunch did not provide this information in their lawsuit.

More importantly, Fusion Garage feels that TechCrunch cannot substantiate their claims for proximate damage allegedly suffered due to “misrepresentations” made by Fusion Garage on the prospects of a joint venture because Fusion Garage did actually have an intention to carry out the joint venture in the first place.

With this summary, we’re sure you’ll be well informed by the time April rolls around!

Follow the Fusion Garage/JooJoo/CrunchPad/TechCrunch story here on SGE: one, two, three, four, five (this piece!), six.

Image taken from Engadget.

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