Jawbone Wins First Major Decision In Legal Saga With Fitbit

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This Tuesday, a judge presiding over one of the lawsuits between Jawbone and Fitbit issued a key ruling in Jawbone’s favor, ordering several former Jawbone employees to hand over confidential corporate records that they were accused of stealing and delivering to Fitbit. Jawbone and Fitbit have been embroiled in a very public legal battle since May of this year, when Jawbone filed a lawsuit charging Fitbit with an elaborate scheme to steal its trade secrets and future business development plans by hiring Jawbone staff and then encouraging them to download sensitive information before quitting.

The decision, announced this week by the Superior Court in California, lends credibility to Jawbone’s allegations and establishes a disclosure framework that will shed light on how much content was stolen from Jawbone by these employees. In court documents filed last week, Jawbone reported that 18,000 documents had already been returned as part of an earlier deal negotiated by Fitbit to prevent the courts from auditing the employee’s computers and records.

The case, one of three legal cases currently being fought between the two companies, began in May just prior to Fitbit’s IPO. In a complaint filed in California State Court, Jawbone charged Fitbit with “systematically plundering” trade secrets by hiring Fitbit employees and then encouraging them to download strategically sensitive and confidential information just before quitting. “This case arises out of the clandestine efforts of Fitbit to steal talent, trade secrets, and intellectual property from its chief competitor,” says the court documents. Though the allegations were broad, specific cases were outlined in the complaint that suggest there may be some truth to the charges. In one noted case, a Jawbone employee accepted a new job with Fitbit on April 16, but continued working at Jawbone for another week, during which time she downloaded strategic product development documents and held meetings with key leaders to discuss future product development roadmaps and timelines. Now, despite Fitbit’s efforts to throw out the request, each accused employee is being ordered to hand over the documents in question, a major early win for Jawbone.

Outside of this case, Jawbone has two additional court cases it is pursuing against Fitbit. One filed in June of this year alleging patent infringement, and a third filed with the International Trade Commission seeking restrictions on Fitbit’s ability to import its devices, or components to manufacture them, until the other two cases are decided.

In September, Fitbit struck back, filing its own patent infringement suit against Jawbone over disputed technology that Jawbone inherited during its BodyMedia acquisition. Despite the legal battle, Fitbit’s performance in the market has been stellar, shares are up nearly 30 percent since its June IPO and climbed six percent today on news that it has added 20 new enterprise customers to its Fitbit Wellness program. Stock prices slid one percent in after-hours trading on news that it had lost the legal decision against Jawbone.


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