TechCrunch Sues Over CrunchPad

Michael Arrington apparently made good on his vows to sue former CrunchPad business partner Fusion Garage on Thursday. The TechCrunch founder says he has filed suit with the Northern District of California Federal court against Fusion Garage alleging fraud and deceit, misappropriation of business ideas, breach of fiduciary duty, unfair competition and violations of the Lanham Act (trademark protection). Fusion Garage plans to go ahead with selling the device on its own under the name JooJoo. The device was supposed to be available for online presage Friday morning, but at the time of this writing it was still unavailable for purchase.

TechCrunch Tablets Its Complaints

In a blog post published early Friday, Arrington made public legal documents that detail TechCrunch's complaints, and include some preliminary evidence the TechCrunch founder believes will support his case. According to the lawsuit, TechCrunch claims to have been deeply involved in the design process of the CrunchPad a.k.a. JooJoo including design and oversight of device specs, performance characteristics (including the JooJoo's nine-second boot speed), software architecture, hardware platform design and component sourcing, hardware form factor, driver integration, user interface and more.

The suit also alleges that TechCrunch paid bills and debts that Fusion Garage was unable to cover, provided advice and direction on technical problems for the device, hosted Singapore-based Fusion Garage's U.S. base of operations, and lined up business deals to promote, market, and distribute the CrunchPad.

In addition to those allegations, the documents Arrington made public include blog posts allegedly created by Fusion Garage that have since been taken down from the company's site, and e-mail correspondence between TechCrunch and Fusion Garage.

Arrington Speaks Out

TechCrunch's founder also added some of his own personal thoughts about the unfolding controversy in his Friday blog post. Arrington says his company had lined up "top tier investors" to support the project, as well as restating previous claims that he had lined up a major retail partner willing to distribute the device, and to keep the retail price of the device low. Arrington says all of these partners are willing to put statements on the record supporting TechCrunch's claims.

Arrington also said on Friday that Fusion Garage's financial situation is a mess. Arrington believes that Fusion Garage, even with an influx of revenue from JooJoo presales, does not have the financial ability to mass produce the JooJoo and fulfill its obligations to customers. "Fusion Garage is, and always has been, a company on the edge of going out of business," Arrington wrote.

Fusion Garage's public relations agency has been asked for a response to these allegations, and we will post any communication we get from them as soon as it is available.

Fusion Garage for the Defense

It should also be pointed out that during a video call with members of the press on Monday, Fusion Garage CEO Chandra Rathakrishnan disputed most of Arrington's claims about TechCrunch's support for the project. Rathakrishnan contends that Fusion Garage is solely responsible for the final prototype the company debuted on Monday.

CrunchPad Genesis

The CrunchPad project was a result of a blog post Arrington published in July 2008. At the time, the TechCrunch founder wanted a "dead simple Web tablet" that would cost around $200. Arrington says TechCrunch company developed two prototypes on its own, before producing a third prototype with deeper assistance from Fusion Garage. By June the CrunchPad launch prototype was complete, according to Arrington.

However, by November the business relationship between Fusion Garage and TechCrunch had broken down, and Arrington declared the CrunchPad dead. Arrington claims this was due to deceitful practices on Fusion Garage's part. Rathakrishnan told reporters on Monday that his company had to move on and bring the device to market without TechCrunch, because none of Arrington's many promises of support ever came true.

It is now left up to the courts to sort out the grievances on both sides.

You can read the court documents supplied by TechCrunch for yourself below.

SF-38-303-C2_20091210160410_00000001 -

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