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Jawbone Sues Fitbit Ahead of Rival's IPO

Jawbone alleges that Fitbit has stolen talent, trade secrets and intellectual property from its chief competitor.

Vjeran Pavic for Re/code

Consumer electronics company Jawbone has sued rival Fitbit for “systematically plundering” trade secrets, by poaching Jawbone employees who had access to confidential information and took steps to download this information before leaving the company.

According to the suit, filed in California State Court earlier today, Fitbit had recruited an estimated 30 percent of Jawbone’s workforce since early 2015 and induced some employees to join Fitbit, who brought with them “intimate knowledge of key aspects of Jawbone’s business.”

In one instance, an employee at Jawbone was said to “download onto her personal computer a highly confidential presentation that laid out in detail the positioning of Jawbone’s current and future technologies” just before she left to become a user experience researcher at Fitbit.

This employee and others who left to go work for Fitbit were also said to have forwarded highly sensitive confidential company information to personal email accounts before they left, even going as far as installing a tool called “CCleaner” on their computers to cover their tracks, the filing alleges.

Another former Jawbone employee, a product design engineer “who had access to every aspect of the mechanical and industrial design of Jawbone’s products, including its fitness trackers and its full lineup of audio products,” allegedly downloaded confidential information to a portable USB drive after accepting a position at Fitbit, but before notifying Jawbone.

The filing states that a Fitbit recruiter admitted at one point, “Fitbit’s objective is to decimate Jawbone.”

The lawsuit comes as San Francisco-based Fitbit is revving up for an initial public offering. The company is planning to trade on the NYSE under the ticker “FIT.”

According to its S-1 filing, Fitbit sold 10.9 million devices last year, and reported revenue of $336.8 million and net income of $48 million for the three months ended in March 31. Fitbit has repeatedly said that it dominates the U.S. activity-tracking market, supported mostly by data from the NPD Group.

At the same time Jawbone, which is also based in San Francisco, has just raised $300 million in funding from investment firm BlackRock, as it looks to continue making its signature audio and wearable products.

It also just launched its newest activity-tracker, the Up3, after the product was delayed by several months. (See here for Re/code’s review of the Up3, which has received tepid reviews.) The Up3 is mentioned in the filing as an example of Jawbone’s “numerous technological advances” it claims Fitbit does not have and would be incentivized to poach.

News of the lawsuit was first reported by the New York Times.

Fitbit could not be reached for comment. Jawbone declined to offer comment beyond what it has stated in the filing.

Update: A spokesperson for Fitbit has put out the following statement: “As the pioneer and leader in the connected health and fitness market, Fitbit has no need to take information from Jawbone or any other company. Since Fitbit’s start in 2007, our employees have developed and delivered innovative product offerings to empower our customers to lead healthier, more active lives.

We are unaware of any confidential or proprietary information of Jawbone in our possession and we intend to vigorously defend against these allegations.”

This article originally appeared on Recode.net.

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