Updated: Andy Rubin’s Essential sued by company backed by iPod creator Tony Fadell

This post has been updated with additional comment from Essential.

Essential, the new smartphone company created by Android founder Andy Rubin, is getting sued by a wireless connector technology company backed by Tony Fadell, known for his role in creating the iPod for Apple.

In an unexpected fight between two upstart companies backed by established names in Silicon Valley, Keyssa sued Essential in San Francisco on Monday, alleging the latter used Keyssa’s proprietary technology after the two companies severed their partnership.

Keyssa sued Essential on three accounts: violation of the federal Defend Trade Secrets Act, California’s Uniform Trade Secrets Act and a breach of its non-disclosure agreement.

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The product in question is Essential’s smartphone and its accessories, which clip onto the phone via wireless magnetic connectors. The most notable one is a 360-degree camera, which latches onto the Essential Phone to capture a panoramic view.

Keyssa alleges in its suit that the two companies signed a non-disclosure agreement last February, allowing Essential to work with Keyssa’s intellectual property. Ten months later, Essential ended its relationship with Keyssa, allegedly telling Keyssa that it will instead use a wireless chip from a third-party company.

“Despite these obligations, Essential misappropriated Keyssa’s trade secrets without attribution or compensation to Keyssa,” reads the suit. “Essential did not incur any of the risk, time, or expense that Keyssa incurred in independently developing its own wireless connectivity solutions and, therefore, Essential should not be permitted to misappropriate Keyssa’s trade secret wireless connector accessory technology in order to unjustly enrich itself.”

In their short partnership, Keyssa says it allowed 20 of its top engineers and scientists to assist Essential and had Essential employees visit its offices in Campbell and Portland.

Keyssa, which was founded in 2009 to create “contactless connectivity,” has been working on technologies, named Kiss, which can allow devices to share data and video without needing an HDMI or USB cable. It has raised more than $100 million from Fadell, Samsung and Foxconn, Apple’s largest supplier, according to Reuters.

Essential launched its first flagship phone in August with much media fanfare. Essential sold only 5,000 of its phone in the first month, according to estimates from BayStreet Research, a firm that tracks smartphone sales.

Like Keyssa, Essential received huge backing from tech giants; a week before its phone pre-orders opened, Essential got a $300 million investment boost from Amazon and Chinese tech giant Tencent.

Keyssa provided the following statement:

“We commend Essential for bringing to market a product that moves forward the concept of a mobile phone peripheral bus. We provided extensive engineering guidance and confidential know-how to help Essential develop the wireless accessory connector used to connect the Essential Phone to accessories such as the Essential 360° Camera.  Keyssa has not been compensated for Essential’s use of this guidance and know-how.  We are pursuing this action because our attempts to resolve this matter through discussions with Essential have not been successful.”

New: Essential responded on Friday with this statement:

“Essential has created pioneering technology that is not based on any Keyssa know-how. Their claims have no merit and we will defend ourselves vigorously as we continue to deliver our first products to customers.” (End new)

Photo: The 360-degree, fish-eye camera connects to the Essential phone through its magnetic connector in the back. (Courtesy Essential)


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