A San Francisco judge has ordered five employees of wearable-device maker Fitbit to return confidential information they took before leaving rival Jawbone, a legal victory in a series of lawsuits that claim Fitbit stole its trade secrets by poaching employees.
San Francisco Superior Court Judge Harold Kahn issued a preliminary injunction Thursday, ruling that Jawbone would likely win its claim that the former workers breached their confidentiality agreements with Jawbone by taking the information to their new employer. With the ruling, the employees must turn over all "proprietary information, technical data, trade secrets or knowhow" to the San Francisco-based Jawbone.
The injunction is the latest development in the saga between the rival wearable-device makers battling in a burgeoning marketplace. Now their battle is unfolding in the courtroom as well. Jawbone, which makes the Up lines of fitness trackers, has filedagainst Fitbit since May. Jawbone accuses its rival of luring away at least five of its former employees and stealing trade secrets and other data in the process.
Fitbit, which had an initial public offering in June, has repeatedly denied all of Jawbone's claims. Shares of Fitbit were up nearly 3 percent at closing Tuesday.
Jawbone applauded the judge's decision Tuesday.
"We believe this speaks volumes about Jawbone's claims," Jawbone said in a statement. "Jawbone is pleased with the court's issuance of an injunction, which was bitterly contested by Fitbit and looks forward to continuing this litigation against Fitbit and its employees."
Jawbone also claims in court documents filed last week that the Fitbit employees returned 18,000 confidential files that were taken from Jawbone to avoid a possible audit. But the judge, who had issued a tentative ruling in favor of Jawbone, rejected Fitbit's notion and said "the breaches have caused Jawbone to suffer irreparable harm" and the San Francisco-based company was entitled to a preliminary injunction.
Fitbit said in a statement that Tuesday's ruling was a "merely a continuation of last week's hearing and nothing new. Any characterization of this ruling as anything other than administrative in nature is simply an attempt for publicity...In fact, we supported the approach that was accepted and we are pleased with the outcome."
Since its launch in 2007, Fitbit's sales soared 142 percent last year, to $745.4 million, according to industry tracker NPD Group. The maker sold nearly 11 million devices in 2014, capturing nearly 70 percent of the wearables market. Meanwhile, Jawbone held roughly 19 percent of the market in 2013. Its share of the market in 2014 is not known.
In May, Jawbone filed its first lawsuit against Fitbit in San Francisco Superior Court alleging the employees upon leaving copied internal Jawbone documents detailing vital trade secrets, including the company's supply chain, revenue, product lineup costs, and gave them to Fitbit.
According to the lawsuit, Jawbone conducted forensic analyses on its former employees computers showed that a number of them used thumb drives to steal company information. In one instance, the company accuses a former researcher of downloading Jawbone's secret plans onto her personal computer to pass that information on to her new employer, Fitbit.
Jawbone filed a second lawsuit against Fitbit in US District Court in San Francisco in June, claiming patent infringement on a wellness app. Jawbone followed up the next month by filing a complaint with the International Trade Commission that accused Fitbit of stealing trade secrets by poaching its employees.
Update, 8:35 a.m. PT October 21: An additional statement from Fitbit was inserted.