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February 7, 2017

Fitbit faces criminal investigation into alleged Jawbone trade secrets theft

The companies have been fighting in legal battles since May 2015.

By CBR Staff Writer

Fitbit is under investigation by a criminal grand jury in the US for allegedly stealing trade secrets from its rival Jawbone to make fitness devices.

Bloomberg reported the news citing a court filing by Jawbone, which claims that Fitbit poached its employees to gain knowledge of its key trade secrets.

Fitbit, which wants the lawsuit to be dismissed, is arguing that the US International Trade Commission had already analysed and rejected trade secret claims in Washington in October.

According to Bloomberg, Jawbone said the agency looked only at some allegations against Fitbit and had no authority to consider claims against the former employees who are also defendants in the lawsuit.

The company cited the criminal probe in a court filing to support its argument that the question of stolen information by unknown people is still unresolved.

Fitbit said it is cooperating with the US attorney’s office in the criminal investigation to prove for one more time that the allegations are without merit.

In its May 2015 complaint, Jawbone alleged that Fitbit appointed five of its employees who had over 350,000 confidential Jawbone files with them.

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Jawbone claims the files included data about sensors, materials, and detailed breakdowns of its costs and profit margins.

In last week’s filing, Jawbone said: “The evidence developed to date in this litigation confirms a conspiracy by Fitbit and the individual defendants to steal Jawbone’s coveted trade secrets and to use them to enhance Fitbit’s position in the marketplace, in clear violation of California law.”

Fitbit said there is no allegation or proof that the files Jawbone says were taken by its ex-employees were ever downloaded to or accessed on its systems.

The company noted that it turned over the files to Jawbone after identifying that a former employee had saved them on a cloud-based computer backup service.

A hearing in the case is set for 15 February.

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