Wearables maker Jawbone may be out of business, but its beef with rival Fitbit lives on apparently in the form of a grand jury indictment handed down Thursday from the U.S. District Court of Northern California. The indictment, for theft of trade secrets, names the same six employees named in Jawbone's civil suit against Fitbit, but does not name Fitbit itself.
The indictment includes new information about the alleged trade secrets theft, which took place prior to 2015. The case concerns six employees who left Jawbone for jobs at Fitbit at various times. All but one defendant has since left Fitbit's employ.
Some employees are accused of stealing market research about fitness tracker opportunities in China, and some are accused of stealing internal studies, including a comparison study of consumer behavior in which consumers wore both a Jawbone and Fitbit device. But the majority of the alleged thefts deal with a never-released Jawbone product called Project Heisenberg that would have been a pair of fitness headphones. Fitbit released its Fitbit Flyer headphones in 2017.
The grand jury indictment is interesting because, as Fitbit pointed out in an email to MobiHealthNews, International Trade Commission Judge Dee Lord ruled in Fitbit's favor in the corresponding civil suit (Jawbone took the case to the ITC, seeking to block Fitbit's imports).
"In a trade secret misappropriation case brought by Jawbone in the International Trade Commission in 2016 that involved these same individuals, a federal administrative law judge during a nine-day trial on the merits found that no Jawbone trade secrets were misappropriated or used in any Fitbit product, feature or technology,” the company wrote.
Indeed, as we reported at the time, Lord's ruling was unequivocal.
"Complainants’ allegations are so vague and contradictory that it is not possible to determine what constitutes alleged trade secret no. 98, much less to determine whether it was misappropriated," she wrote in her 2016 decision. "Moreover, Complainants’ allegations are contradicted by the factual record, which refutes any inference of misappropriation. Accordingly, Complainants have not satisfied their burden to make out a prima facie case of trade secret misappropriation."
The Department of Justice has been investigating the claims on its own since at least October 2017. The former employees are charged with a felony count of Possession of Stolen Trade Secrets, the penalty for which is 10 years imprisonment and a $250,000 fine. The defendant's court date is July 9th.
"Intellectual property is the heart of innovation and economic development in Silicon Valley,” Acting U.S. Attorney Alex Tse said in a statement. “The theft of trade secrets violates federal law, stifles innovation, and injures the rightful owners of that intellectual property.”
