Jawbone lawsuit alleges Fitbit poached employees who stole Jawbone trade secrets

By Aditi Pai
02:29 am
Jawbone UP2 Jawbone UP2

Just a few weeks after Fitbit filed for an IPO, one of the company's biggest competitors, Jawbone, has sued Fitbit, according to the New York Times. Jawbone alleges that Fitbit poached employees who downloaded sensitive data about Jawbone before leaving the company.

The full text of the suit can be read here.

"According to the complaint, recruiters for Fitbit contacted nearly a third of Jawbone’s employees early this year," the NYT explained. "Some of those employees then decided to leave, but before doing so downloaded information like Jawbone’s current and future business plans and products. Those individuals used thumb drives to download files and used programs to cover their tracks or deleted system logs, according to the court filing."

In the filing Jawbone describes one of its former employees as requesting a meeting with company executives to better understand the company's future strategy and get a look at prototype devices for future products. Weeks before leaving to join Fitbit, she then downloaded the presentation, which Jawbone said was its "Playbook for the Future" onto her personal computer.

Fitbit put out a statement responding the lawsuit Wednesday night.

“As the pioneer and leader in the connected health and fitness market, Fitbit has no need to take information from Jawbone or any other company,” the statement says. “Since Fitbit’s start in 2007, our employees have developed and delivered innovative product offerings to empower our customers to lead healthier, more active lives. We are unaware of any confidential or proprietary information of Jawbone in our possession and we intend to vigorously defend against these allegations.” 

Fitbit has faced lawsuits before, and at least one other suit has popped up timed with Fitbit's IPO announcement.

Just a week ago, a California man filed a class action suit against Fitbit, alleging that the company’s sleep tracking is inaccurate and constitutes false advertising. Earlier this year, Fitbit won a trademark infringement lawsuit case, that UK-based Fitbug brought against it in March 2013.

While Jawbone and Fitbit are competitors, a number of research groups including NPD and Canalys, have reported that Fitbit is the dominant wearable activity tracker company in the market.

In a survey of 43 investors conducted last month, 20 percent of respondents said they expect Jawbone to go public this year, in light of Fitbit's IPO.

Meanwhile, Jawbone has been dealing with a few finance problems.

In early 2014, Jawbone was expecting to raise $250 million from investors affiliated with Rizvi Traverse, but according to a report from Fortune, this investment came up short, forcing Jawbone to “scramble yet again to raise new funds”. Later that year, Jawbone’s contract manufacturer, Flextronics, sued the company because Jawbone’s “perilous” financial position prevented the company from paying its $20 million tab. The suit settled quietly soon after.

In November 2014, Jawbone announced that the UP3 was due out by the end of the year, along with a less expensive version of the device called Move. While Jawbone’s Move tracker did launch shortly after, the company subsequently announced that its UP3 would not ship by year-end as previously promised.

And, although Jawbone finally announced that they would start shipping the UP3 last month, it couldn’t get the waterproofing right, so the device won’t be for use by swimmers as originally intended.

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