Crunch Time for CrunchPad

It really doesn’t get much more Silicon Valley than this.

Influential, tantrum-prone tech blogger Mike Arrington came up with an idea for a touch screen tablet that will only be used to surf the web. Arrington and his fellow bloggers at TechCrunch were so enamored with their idea that they started working to produce the “CrunchPad” with a startup from Singapore called Fusion Garage. A few days before the launch, Fusion Garage allegedly decided to cut Arrington out of the picture.

See if that made him mad, after the jump

Well, Arrington used to be a lawyer at Wilson Sonsini. So he hired legal firepower in the form of Andrew Bridges, an IP partner at Winston & Strawn and onetime colleague at Wilson. Litigation will be coming soon, Arrington wrote Friday on his blog. He also posted the lawyer letters sent by Winston & Strawn.

After getting word on Nov. 30 that Fusion Garage would be releasing the Joo Joo -- the CrunchPad renamed -- without him, Arrington wrote:

“Err, what? This is the equivalent of Foxconn, who build the iPhone, notifying Apple a couple of days before launch that they’d be moving ahead and selling the iPhone directly without any involvement from Apple.”

Bridges and fellow Winston lawyer Dave Bloch sent letters to Fusion Garage CEO Chandrasekar Rathakrishnan, accusing him and his company of misappropriating TechCrunch’s IP and breach of contract. "We jointly own the CrunchPad product intellectual property, and we solely own the CrunchPad trademark," wrote Arrington. "So it's legally impossible for them to simply build and sell the device without our agreement."

At a press conference Monday, Rathakrishnan told reporters that there was no contract and that Arrington was more of a talker than a doer. And, may we add, not much of a lawyer, if there really is no agreement.

"There were no contracts whatsoever," said Rathakrishnan, according to a report in the S.F. Chronicle. "We own the IP. We have down all the hardware, all the software."

No agreement may prove to be an obstacle to a good lawsuit, said Chris Scott Graham, an IP litigator at Dechert. “From what I can tell he didn’t reference any documents memorializing the rights to the IP,” said Graham after reading Winston’s letters. “If you have an agreement, you’re likely to get more traction.”

Graham said he sees a lot of startups try to save money by not hiring lawyers in the very beginning of projects. “When they’re working together, they have a bright glorious future,” said Graham. But then when it goes south, everyone wishes they’d spent the $10K on a good lawyer to draw up the agreements in the first place.

We'll keep you posted. Maybe Arrington will update the adage: Don’t pick a fight with someone who buys bandwidth by the bundle.

—  Zusha Elinson