Five former Fitbit employees and another individual who still works at the company are facing criminal charges over trade secret theft, having been accused of stealing protected technologies from Jawbone and taking them to their new employer and one of the firm's largest rivals. Jawbone sued Fitbit over patent infringement and employee poaching in 2015 but went out of business in the meantime, having started liquidation proceedings last summer. Jawbone disclosed Fitbit was already the subject of a criminal probe in early 2017, prompting its rival to dismiss the possibility of its employees engaging in any foul play.
Fitbit previously accused Jawbone of launching a hopeless lawsuit due to its "complete failure" to build a successful business. The firm's latest consolidated financial report published in early March revealed that the case in question was reverted back to its criminal proceedings status but hasn't elaborated on the matter. The lawsuit doesn't target the company itself but its employees as private citizens who broke their contract with Jawbone. The defendants will be making their first court appearance on July 9, with the case being tried by San Jose, California-based U.S. Magistrate Judge Virginia K. DeMarchi. "In a trade secret misappropriation case brought by Jawbone in the International Trade Commission in 2016 that involved these same individuals, a federal administrative law judge during a nine-day trial on the merits found that no Jawbone trade secrets were misappropriated or used in any Fitbit product, feature or technology," a company spokesperson said in an emailed statement to AndroidHeadlines.
Even beyond the trade secret lawsuit, Fitbit continues to struggle; three years after its New York Stock Exchange debut, the company is trading at less than $7.50 per share, not even a quarter of its IPO price. It also remains in the red, having lost over $277 million last year as its revenue dropped by half a billion dollars due to declining sales. The firm was running a profitable business for two years prior to 2016 but its bottom line now isn't expected to return to the black anytime soon. The wearable industry as a whole is presently moving away from fitness trackers, a product category that Fitbit largely pioneered, which the firm highlighted as the main reason for its current struggles as it's now transitioning to smartwatches in an effort to revive its business.