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Two wearable companies that have been battling in the marketplace are now increasingly finding themselves at odds in courtrooms.
Wearable device maker Jawbone has filed a complaint with the International Trade Commission (ITC) against competitor Fitbit, arguing that the company stole its trade secrets by poaching employees. The filing requests that the ITC, which governs unfair trade practices and imports to the US, ban Fitbit from importing the company’s products and components into the country.
The Jawbone filing is the third lawsuit in two months against Fitbit. The company argues that Fitbit strategically lured away its employees to steal its trade secrets. Jawbone, which makes the Up line of fitness trackers, claims that Fitbit poached as much as 30 percent of its workforce early this year to gain knowledge of key trade secrets, including its upcoming product lineup, information about its supply chain, and financial data. Fitbit has denied all claims.
“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,” a Fitbit spokeswoman said in a statement. “Since its inception, Fitbit has more than 200 issued patents and patent applications in this area. Fitbit plans to defend itself vigorously against all allegations made in the complaint to the International Trade Commission.”
The lawsuits have proven to be little more than a distraction for Fitbit, which has had a rather strong month. The company in June went public and since then, has nearly doubled its IPO price, with current shares trading at $42.87. Like Jawbone, Fitbit offers a range of wearables for fitness lovers, including the company’s Charge HR and Surge wearable activity trackers.
Jawbone’s lawsuits suggest just how high the stakes are in the wearables market. In February, research firm CCS Insight said that by 2018, 172 million wearables will be sold worldwide, up from just 29 million in 2014. Smartwatches and fitness trackers will prove to be the most popular products in that category, according to the company. Jawbone and Fitbit, in other words, are fighting for a share of what could prove to be a massive market.
Still, they’re not alone. Nearly every prominent technology company is getting into the wearables space in some way, offering fitness trackers, smartwatches and other devices. Apple gave the sector a boost with the launch of its Apple Watch , a smartwatch that doubles as a fitness and activity tracker. Samsung and LG, as well as smaller companies like Pebble, are also competing in the wearables market. Even non-traditional technology companies, like watchmaker Fossil, are betting on the wearables market soaring in the coming years.
Given the size and importance of the wearables market, Jawbone is hoping to move fast, according to the Wall Street Journal, which obtained a copy of the ITC claim. The claim has asked the Commission to provide a ruling within 15 months and a cease-and-desist order to be handed down before then while the Commission mulls the case. The previous lawsuits were filed in US superior and district courts.
Jawbone declined comment on the lawsuit.
Update, 10:33 a.m. PT: To include Fitbit’s statement.
