Fusion Garage Moves to Dismiss CrunchPad Tablet Lawsuit

Fusion Garage filed a legal motion to dismiss a lawsuit filed against it by TechCrunch founder Michael Arrington, who insists that the company ripped off the design for his never-released CrunchPad for its JooJoo tablet PC. In the filing, Fusion Garage describes the legal action between the two entities as the fallout of a failed merger. Arrington originally intended for the CrunchPad to be a cheap, open-source device retailing for around $200. The announcement of the Apple iPad has superheated the tablet PC space lately, with a number of companies planning competing devices.

Fusion Garage filed a motion on Feb. 1 to dismiss the lawsuit filed against it by TechCrunch, the publishing entity founded by blogger Michael Arrington, which alleges that Fusion Garage's JooJoo tablet PC is a rip-off of Arrington's never-released CrunchPad.

The legal action continues a saga that began in late 2009, when Arrington began insisting on his TechCrunch blog that Fusion Garage, his ostensible partner in producing a low-cost tablet PC meant primarily for Web surfing, had effectively stolen the project from under him. In the beginning of December, Fusion Garage announced the JooJoo was available for pre-ordering, at a price of $499.

Fusion Garage's latest legal maneuver is to argue that Arrington's claims have no merit, in a filing with a United States District Court, Northern District of California, San Jose Division (Case No. 09-cv-5812 JW).

"This case arises out of a failed merger," begins the filing's preliminary statement. "After the parties' merger talks fell through, Plaintiffs filed this lawsuit to disrupt Fusion Garage's introduction of its product to the market. While Plaintiffs claim to have part ownership in some unspecified intellectual property of Fusion Garage, they do not allege the existence of...any contract at all between the parties."

The filing challenges Arrington's earlier statements that the tablet project was fundamentally an open-source one, designed so that anyone with the technical wherewithal could build their own device:

"While Arrington stated in his blog post that he wanted to 'open source' the product and 'let anyone build one that wants to,' TechCrunch now claims it owns certain -business ideas' related to the web tablet," the document continues. "Plaintiffs' claim for misappropriation of business ideas fails because no such claim exists under California law. Plaintiffs also disclosed their supposedly novel ideas all over the Internet."

The rest of the filing highlights quotes from Arrington supposedly giving credit to Fusion Garage for developing the tablet's hardware and software, and insists that no contract exists between the two parties. It also traces out a narrative: In Nov. 2009, one of Fusion Garage's primary investors insisted that the company offer Arrington a merger deal where TechCrunch would receive 10 percent equity; the logic, according to the filing, was that Fusion Garage had "assumed all related operation and developmental costs of the device."

From that point forward, merger talks allegedly fell apart, and Fusion Garage moved forward with the development of the JooJoo. Arrington originally filed his lawsuit against Fusion Garage on Dec. 10, writing in a post on TechCrunch: "The causes of the action include Fraud and Deceit, Misappropriation of Business Ideas, Breach of Fiduciary Duty, Unfair Competition and Violations of the Lanham Act."

At the time, Arrington chose to level some choice broadsides against Fusion Garage, stating that the company's behavior constituted a "pattern of lies" and that its corporate structure was fundamentally unsound: "Fusion Garage is, and always has been, a company of the edge of going out of business...The company was constantly raising debt from unsavory investors, borderline loan-sharks, to make payroll."

Arrington had planned to debut his version of the tablet PC, which he named the CrunchPad and insisted was demo-ready, onstage at the Real-Time CrunchUp event on Nov. 20. Arrington's original aim for the project, started in July 2008, was to develop a tablet that cost around $200, although that price-point rose as development progressed. Despite being unavailable for purchase at the time, Popular Mechanics named the CrunchPad one of its "10 Most Brilliant Products of 2009."

"And then the entire project self-destructed over nothing more than greed, jealousy and miscommunication," Arrington wrote in a Nov. 30 posting on TechCrunch.

In the meantime, Apple announced its own tablet PC, the iPad, on Jan. 27. Widely expected to be a substantial competitor in the tablet PC arena, the device will be available for sale at some point within the next two months.

In a Feb. 1 interview with VentureBeat, Fusion Garage CEO Chandra Rathakrishnan insisted that the JooJoo has competitive advantages to the iPad.

"It has a much larger screen, 12.1 inches instead of 9.7 inches," Rathakrishnan told the interviewer. "Watching video on it is a joy. And the Web browsing experience is even better than the iPad, because of the size of the screen."