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Fitbit wins first round in Jawbone trade secrets case

WASHINGTON — Fitbit was cleared of allegations that its activity trackers were made using confidential information that had been stolen from rival Jawbone.

In this Dec 15, 2014, file photo, fitness trackers, from left, Basis Peak, Adidas Fit Smart, Fitbit Charge, Sony SmartBand, and Jawbone Move, are posed for a photo next to an iPhone, in New York. Photo: AP

In this Dec 15, 2014, file photo, fitness trackers, from left, Basis Peak, Adidas Fit Smart, Fitbit Charge, Sony SmartBand, and Jawbone Move, are posed for a photo next to an iPhone, in New York. Photo: AP

WASHINGTON — Fitbit was cleared of allegations that its activity trackers were made using confidential information that had been stolen from rival Jawbone.

Fitbit and its contract manufacturer, Flextronics International, didn’t steal trade secrets to make the fitness devices, US International Trade Commission Judge Sandra Dee Lord said in a notice posted on the agency’s website on Tuesday (Aug 23). The judge’s findings are subject to review by the full commission, which has the power to stop products made overseas from entering the US.

“No party has been shown to have misappropriated any trade secret,” the judge said in the notice. Her full findings will become public after both sides get a chance to redact confidential information.

The trade secrets allegations are all that’s left of virulent back-and-forth patent-infringement complaints the companies had filed against each other at the Washington agency. Three Fitbit patents and four Jawbone patents were invalidated by judges, although the companies are challenging those findings.

Biggest Maker

Fitbit remains the largest maker of activity trackers even as both companies face increasing competition from more established electronics companies such as Apple Inc. and Samsung Electronics.

Jawbone had claimed that Fitbit lured away key employees, who brought with them confidential information, accusing Fitbit of “systematically plundering Jawbone” employees and information such as designs and marketing plans in an effort to “decimate” its rivals. The company also has filed trade secret claims against Fitbit in state court in California.

Fitbit said it was pleased with the judge’s findings.

“From the outset of this litigation, we have maintained that Jawbone’s allegations were utterly without merit and nothing more than a desperate attempt by Jawbone to disrupt Fitbit’s momentum to compensate for their own lack of success in the market,” Mr James Park, Fitbit’s co-founder and chief executive officer, said in a statement.

Flextronics has been a contract manufacturer for both companies, and is accused of using Jawbone design information on other products, a charge it denies.

The trade commission can’t order one side to pay the other cash compensation; its sole power lies in ordering customs officials to stop products at the border.

A final decision in the case is scheduled for December, and any import ban would be subject to presidential review, which could put it in the lap of whoever gets sworn in on Jan 20.

The case is In the Matter of Certain Activity Tracking Devices, 337-963, U.S. International Trade Commission (Washington). BLOOMBERG

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