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Jawbone sues Fitbit again, alleges patent infringement

Jawbone plans to go to the ITC, to prevent Fitbit from being able to import its goods in the U.S.

Financial trends and news by Steven Loeb
June 11, 2015
Short URL: http://vator.tv/n/3e2a

Here we go again. Less than two weeks after wearable manufactuerer Jawbone levied a lawsuit at Fitbit, alledgeing that it stole both talent and secrets, the company is back with yet another accusation, this time having to do with patent infringement.

In a filing with the U.S. District Court in San Francisco on Wednesday, Fitbit is accused by Jawbone, which states it has spent more than $100 million on research and development, and has hundreds of patents, of infringing on Jawbone's patent for “a wellness application using data from a data-capable band.”

According to Jawbone, all of the devices sold by Fitbit use technology that infringes on Jawbone's patents.

"Fitbit competes directly with Jawbone in the market for wearable fitness and activity trackers through its product line, most notably the Zip, One, Flex, Charge, Charge HR, Surge," it says in the complaint. "These trackers – which make up virtually all of Fitbit’s wearable technology line – infringe one or more of the Jawbone patents."

Also involved in the suit are BodyMedia, a company bought by Jawbone in 2013, and AliphCom, a subsidiary of BodyMedia. Not only are they seeking to halt all sales of Fitbit products, but to stop them from being imported into the country in the first place.

In the filing it states that "AliphCom and BodyMedia intend to file a complaint requesting the International Trade Commission (ITC) to commence an investigation pursuant to Section 337 of the Tariff Act of 1930," in an attempt to put a ban on Fitbit products being imported within the United States. 

Fitbit, of course, is denying that these allegations have any merit.

“As the pioneer and leader in the connected health and fitness market, Fitbit has independently developed and delivered innovative product offerings to empower its customers to lead healthier, more active lives," the company said in a statement provided to VatorNews.

"Since its inception, Fitbit has more than 200 issued patents and patent applications in this area. Fitbit plans to vigorously defend itself against these allegations.”

A Jawbone spokesperson would not comment beyond what was already in the complaint.

As I stated earlier, this is the second lawsuit from Jawbone against Fitbit in less than a month. In late May, the company accused Fitbit of "clandestine efforts," which were done to "steal talent, trade secrets, and intellectual property" from Jawbone.

A startling 30% of Jawbone employees were allegedly contacted by Fitbit since the beginning of this year, and got at least five to join the company. It did this, the filing alleged through "lofty promises and expectations" leading up to Fitbit's recently announced IPO.

When those employees went over to Fitbit, it says, they brought "access to, and key knowledge of, key aspects of Jawbone's business and the future direction of the market and business."

Not only that, but they are being accused of downloading documents related to Jawbone's business plans, technology and products. All of this was done because, according to Jawbone, Fitbit "lacked the proprietary technology, capabilities and expertise to progress to the next generation" of wearables. So they needed to steal it from Jawbone.

The timing of these lawsuits seems a tad suspicious; in May, FItbit filed for a $100M IPO, and these lawsuits seem designed to throw a wrench into those plans.

Founded in 2007, Fitbit currently sells six connected health and fitness trackers. The company is currently profitable. The company saw $745.4 million in revenue in 2014, with net income of $131.8 million, up from $271.1 million in 2013, on a net loss of $51.6 million.

As of the end of March 2015, Fitbit had sold over 20.8 million devices since its inception. More than half of those devices, 10.9 million, were sold in 2014, up from 4.5 million in 2013 and only 1.3 million in 2012.

Founded in 1999, Jawbone is the maker of the Jawbone UP health tracker, as well as the Jambox, Bluetooth wireless headsets, and noise-canceling headphones.

In April, the company completed a $300 million funding from BlackRock, giving it around $725 million in total funding and valuing it at roughly $3 billion. The company could also be prepping for an IPO of its own; investors in the healthtech space named it as the next company that they believe will file this year. 

 The filing was first uncovered by the Wall Street Journal on Wednesday.

(Image source: modernlifeisnotthatbad.wordpress.com)


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