Competitor Claims Fitbit Swiped Its Secrets

SAN FRANCISCO (CN) - To prepare for its initial public offering, Fitbit poached talent and stole trade secrets to "decimate" a competitor, Jawbone claims in court.

Jawbone filed the complaint on Wednesday in superior court, accusing Fitbit of "clandestine efforts ... to steal talent, trade secrets and intellectual property."

Both companies make "wearable devices" for athletes to monitor their bodies. The lawsuit is the Top Download for Courthouse News on Thursday.

Jawbone claims that Fitbit "lacked the proprietary technology, capabilities and expertise to progress to the next generation" and "deliver on the lofty promises and expectations conveyed to investors as part of its impending initial public offering," so it began "systematically plundering Jawbone employees" to gain "critical trade secrets and intellectual property."

Jawbone says Fitbit recruiters contacted about 30 percent of its employees, and that one recruiter said: "'Fitbit's objective is to decimate Jawbone.'"

"As Fitbit well knows, the law prohibits companies from 'decimating' their competitors through the theft of confidential, proprietary information," Jawbone says.

Jawbone says it builds hardware products and software platforms powered by data science and conducts extensive market research. It claims to have been granted or applied for more than 600 patents.

It claims Fitbit ran a "carefully orchestrated plan to abscond with reams of proprietary and confidential information regarding the intricacies of Jawbone's business and the future direction of the market."

"Namely, in the days, weeks and months leading up to their departures, the new additions to Fitbit's workforce gained access to and downloaded from their work computers information regarding Jawbone's current and projected business plans, products and technology," Jawbone claims.

The stolen proprietary information included plans for new products, technologies and market projections, Jawbone claims. It says it checked the work computers of former employees who left for Fitbit and learned that many of them used USB thumb drives to steal information and send it to Fitbit.

"The stolen files are the information equivalent of a gold mine for Fitbit," Jawbone says. "They provide an intricate roadmap into the core of Jawbone's business."

To "mollify" Jawbone officials until after the initial public offering is complete, Fitbit's chief people officer, Marty Reaume contacted her counterpart at Jawbone on April 15 and admitted "poaching" Jawbone employees but said they were doing nothing wrong, Jawbone says in the complaint.

Jawbone disagrees. It claims the lost talent and proprietary information likely will inflict hundreds of millions of dollars in damage, Jawbone says. (Graph 8)

Fitbit intends to sell its shares on the New York Stock Exchange using the symbol FIT and hopes to raise up to $100 million in capital, TheStreet reported on May 7.

Jawbone accuses Fitbit of misappropriation of trade secrets, unfair business practices, breach of contract and bad faith.

Also named as defendants are former Jawbone employees Katherine Mogal, Patrick Narron, Patricio Romano, Anna Rosario and Rong Zhang.

Jawbone seeks injunctive relief and compensatory, consequential, punitive and exemplary damages, attorney's fees and costs.

It also seeks restitution of past and future profits arising from wrongful conduct.

Jawbone is represented by Lance Etcheverry, with Skadden, Arps, Slate, Meagher & Flom in Los Angeles. He was not available for comment Wednesday.

Fitbit officials could not be reached for comment.

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