Lawsuit: Fusion Garage registered JooJoo domain weeks before ditching TechCrunch, misrepresented production costs


TechCrunch has filed its lawsuit against Fusion Garage over the CrunchPad/Joojoo web tablet. After planning together to make the gadget, the two companies parted ways under acrimonious circumstances.

I am not a lawyer, and nor do I play one on the internet. That said, the lawsuit contains at least one jawdropping allegation that makes Fusion Garage look supremely, hand-wringingly, cacklingly evil.

Namely, that it registered the "Joojoo" domain some time before the parting of ways, but strung TechCrunch's Mike Arrington along for at least a month afterwards–until three days before the planned launch. In the meantime, Fusion Garage CEO Chandra Rathakrishnan claimed in emails that he was relaying stuff as it came, under pressure from shadowy investors.

It's a one-sided story, of course, and the story is of Singapore-based Fusion Garage spotting Arrington's public call for a cheap web tablet, then bilking TechCrunch for money and marketing right up to the point of the completed tablet's public unveiling.

Here's some choice cuts:

When Defendant met TechCrunch in September 2008, it claimed to have developed a browser-based operating system, just like the one TechCrunch was seeking for its CrunchPad project. In fact, it had developed no such thing, and the demo product it showed to TechCrunch was little more than an off-the-shelf browser and some HTML –something TechCrunch did not realize until nearly a year later. Moreover, Defendant had not even been working on a browser-based operating system.

When TechCrunch executives visited the Taiwan headquarters of Pegatron, the company preparing to manufacture the CrunchPad, TC learned that the Defendant had been falsely representing to TC the costs of the product's components …

During the fall of 2009, Pegatron terminated its relationship with Defenant because of Defendant's failure to pay its debts. … Nevertheless, after that date, Defendant … concealed the loss of the most critical supplier.

Defendant had substantial financial difficulties and was relying on loans at exorbitant rates from unorthodox loan sources.

My bias: I think it likely that Arrington got taken advantage of by scoundrels and my sympathies are with his admirable vision of a cheap, hacker-friendly (if not entirely open-source) tablet computer. That said, the allegedly-concealed components bill would have always denied it mainstream appeal: a 3G modem, and hence the option to consumers of a carrier subsidy, would have shaved a lot of pain off that $500 tag.

The communications attached as evidence, if at all accurate, allay suspicions that TC wanted to escape the venture after it became clear the CrunchPad would be a poor commercial prospect.

Another interesting point: the lawsuit alleges that Fusion Garage was not planning to make a tablet before its collaboration with TechCrunch. This, if true, hurts one common and reasonable defense of Fusion Garage: that everyone is making tablets and its hookup with TechCrunch merely added a marketing and branding imprimatur to its own. It worked on the third prototype and final product, and had no involvement in the earliest versions of the tablet, according to the lawsuit.

A proposed merger, to which Rathakrishnan agreed in principle, would have given Fusion Garage a 35% share (it wanted 40%) of the resulting company.

Often mentioned is the value of Arrington's "original concept" or "entire concept," as publicly proposed at TechCrunch. As appealing as the design is, it's hardly imbued with novelty by core feature descriptions such as "an iphone-like touch screen". Got a patent on that?

TC exhorts the court to consider the tablet project a partnership under California law, and hence subject to statues on shared property. But, alas, the lawsuit offers no contracts in evidence.

The lawsuit does, however, find it salient to remind the court that Time Magazine declared Mr. Arrington one of the world's 100 most influential people last year. Hey, at least he got something in writing!

Lawsuit [DocStoc-gimped PDF]