Contempt, Contracts, Money

IoT Wearables Lawsuit! Jawbone Accuses Fitbit Of Stealing Trade Secrets

Jawbone alleges that “beginning in early 2015, Fitbit recruiters contacted an estimated 30 percent of Jawbone’s workforce.

By Peter S. Vogel  
on

Ed note: This post originally appeared on Peter S. Vogel’s Internet, Information Technology & e-Discovery Blog.

Jawbone alleges that “beginning in early 2015, Fitbit recruiters contacted an estimated 30 percent of Jawbone’s workforce” and “Fitbit’s objective is to decimate Jawbone.” The New York Times reported that Jawbone is ‘…accusing its rival of “systematically plundering” confidential information by hiring Jawbone employees who improperly downloaded sensitive materials shortly before leaving.”

The May 27, 2015 Complaint filed in the Superior Court of San Francisco of Aliphcom, Inc. dba Jawbone v. Fitbit, Inc. et al includes these allegations:

…forensic analyses performed by Jawbone on its former employees’ computer devices revealed that a number of the departed employees used USB thumb drives in their last days of employment at Jawbone to steal proprietary company information, and in other cases forwarded confidential company information to personal email addresses for later use.

The stolen files are the informational equivalent of a gold mine for Fitbit, as they provide an intricate roadmap into the core of Jawbone’s business, including such information as Jawbone’s supply chain, gross margins, product lineup (both current and future), product target costs, vendor contract, product analysis, market trends and predictions, and the future direction of Fitbit’s main competitor.

The Complaint includes these causes of action:

  1. Misappropriation of Trade Secrets
  2. Breach of Contract
  3. Breach of Implied Covenant of Good Faith and Fair Dealing, and
  4. Unfair and Unlawful Business Practices (California Business & Professional Code §§ 17200 et seq)

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Theft of trade secrets allegations are very old news in the technology market, but this lawsuit should be an eye opening case for all companies about recruiting employees from competitors.

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