TechCrunch Founder Arrington Files Suit Against JooJoo, Fusion Garage

TechCrunch founder Michael Arrington filed on Dec. 10. a much-threatened lawsuit against Fusion Garage, a startup that he claims stole his idea for the long-awaited CrunchPad tablet PC. Fusion Garage began taking preorders for the $499 JooJoo tablet, which features a 12.1-inch touch screen and can primarily be used to surf the Internet, on Dec. 11. In addition to the lawsuit, Arrington posted on the TechCrunch blog describing what he termed a pattern of deceit on Fusion Garage's part. The matter will be settled in court.

Michael Arrington, founder of popular tech blog TechCrunch, announced that he had filed a lawsuit Dec. 10 against Singapore-based Fusion Garage, formally alleging that the latter company's JooJoo tablet PC is a rip-off of Arrington's never-released CrunchPad.

The JooJoo, a 12.1-inch touch screen tablet priced at $499, was launched for preorders on Dec. 11. The device is primarily meant for surfing the Web. Arrington insists that the JooJoo only exists because of an outright theft of his design for the CrunchPad tablet PC, which he intended to release at a lower price point.

"Thursday afternoon we filed a lawsuit against Fusion Garage in the Northern District of California Federal Court," Arrington wrote in a Dec. 11 post on TechCrunch. "The causes of action include Fraud and Deceit, Misappropriation of Business Ideas, Breach of Fiduciary Duty, Unfair Competition and Violations of the Lanham Act."

Just in case the actual lawsuit-details provided through this link-wasn't enough of a broadside at his former partners on the tablet PC project, Arrington decided to pepper Fusion Garage liberally with strong words throughout the rest of his post.

In addition to describing Fusion Garage's behavior as "a pattern of lies," Arrington questioned its business model: "Fusion Garage is, and always has been, a company on the edge of going out of business. Their main shareholder ... is a chiropractor named Bruce Lee. The company was constantly raising debt from unsavory investors, borderline loan-sharks, to make payroll." Arrington also delved into the character of Fusion Garage CEO Chandrasekar Rathakrishnan, describing him and the company as entities exhibiting "a long-term pattern of deceit."

Then why did TechCrunch decide to do business with the company in the first place? "We paid a lot of expenses directly," Arrington wrote, "and we agreed with Fusion Garage that they had to clean up their cap table before we could acquire them. Fusion Garage agreed and attempted to do this but was never successful."

What's more, Arrington insisted, TechCrunch had lined up "top-tier investors" ready to sign checks as soon as the device was released.

What can Apple and Microsoft learn from the JooJoo? Click here to read more.

In a Nov. 30 post, Arrington said he'd originally planned to debut the CrunchPad onstage at the Real-Time CrunchUp event on Nov. 20. Furthermore, he claimed, the device was demo-ready. "It went hours without crashing," he wrote. "We could even let people play with the device themselves-the user interface was intuitive enough that people 'got it' without any instructions."

As described by Arrington, the ultrathin device featured a single on-off switch, a built-in video camera, low-end speakers, a microphone, integrated Wi-Fi and a 4GB solid-state hard drive. The low-cost unit had been envisioned by him as "a tablet computer that I could use to consume the Internet while sitting on a couch."

According to Arrington, though, that 1.5-year dream of being a tablet PC-powered couch potato came to screeching halt on Nov. 17, when Rathakrishnan e-mailed him to say TechCrunch was no longer involved in the development of the CrunchPad: "Chandra said that based on pressure from his shareholders he had decided to move forward and sell the device directly through Fusion Garage without our involvement."

Arrington claimed that neither TechCrunch nor Fusion Garage owned the intellectual property relating to the CrunchPad, and that a team blended from both entities' personnel had actually assembled the device and shared the development costs.

Rathakrishnan, inevitably, offered a different version of events during a Dec. 7 Web conference with reporters.

"Michael made many promises suggesting he will deliver on hardware, software and funding, none of which came true," Fusion Garage's CEO told the media, according to a Los Angeles Times blog post about the event. "We had to move on. [Fusion Garage] did the hardware. We had made the software. And we had secured the funding. Michael did not deliver on his promises, and we decided to move on."

Either way, the courts will decide.