Fitbit Again Accused of Stealing Trade Secrets From Jawbone

Even though Jawbone has confirmed that it's leaving the consumer wearables market to focus on clinical health products, the company has doubled down on its legal battle with former rival Fitbit, concerning the latter company's alleged theft of trade secrets (via TechCrunch).

The U.S. International Trade Commission has already let Fitbit off the hook for the original claims, but Jawbone is now arguing that the agency only looked at a "limited number of allegations against Fitbit." To back up its argument that the issue remains unresolved, Jawbone referenced in a court filing this month that Fitbit is under investigation by a criminal grand jury concerning the trade secret theft, believing "the issue of what was stolen and by whom remains unresolved."

As of this week, the Justice Department and Department of Homeland Security have been conducting a grand jury probe into Fitbit for five months. Fitbit said that it's cooperating with the investigation "to demonstrate, once again, that these allegations are without merit," with a hearing set for February 15 amid the hopes that the case will finally be dismissed.

The battle between the two companies goes back to 2015, when Jawbone claimed that Fitbit hired five Jawbone employees, who in turn brought with them more than 350,000 secret Jawbone files. According to the original lawsuit, Jawbone said "the files included information about materials, sensors and detailed breakdowns of its costs and profit margins."

Fitbit said that once the files were discovered on a cloud-based backup service of a former Jawbone employee, they were immediately turned over to Jawbone. Ultimately, Fitbit argued that Jawbone's new investigation is built on the exact same "fictional allegations" already cleared by the ITC.

The criminal investigation “is based on the almost identical fictional allegations that were fully rejected by the International Trade Commission after a nine-day trial on the merits and that Jawbone falsely asserted on the eve of Fitbit’s IPO,” Fitbit said in Monday’s statement. “Jawbone is now attempting to exert leverage against Fitbit in civil litigation pending in the California state court.”

Fitbit had a case against Jawbone of its own that it dropped last December because "there was no need to pursue the case" when Jawbone was no longer making and selling the products at issue in the lawsuit. Fitbit also cited Jawbone's financial trouble as a reason to end the lengthy court battle. Jawbone said Fitbit's decision to back out was a "misdirection" on Fitbit's part.