The United States International Trade Commission last Thursday terminated its investigation into whether Fitbit Inc. and manufacturer Flextronics International Ltd. misappropriated trade secrets from San Francisco-based rival Jawbone Inc.
The commission’s action effectively upholds Administrative Law Judge Sandra Dee Lord’s Aug. 23 ruling in favor of Fitbit, in which she determined “no party has been shown to have misappropriated any trade secret.”
“[E]ven if Jawbone had proven misappropriation of the five asserted trade secrets, there is no way to decide on this record what specific injury is attributable to these trade secrets, and whether the injury is substantial,” Lord said, noting Fitbit did not violate section 337 of the Tariff Act of 1930.
Litigation between the wearables companies began in California state court last May, when Jawbone alleged Fitbit had plundered its employees for the sake of obtaining manufacturing insight. A series of additional claims followed, including a July 7 suit filed with the trade commission in which Jawbone sought a ban on the importation of Fitbit products that its representatives said violated protected company patents, citing a Tariff Act violation. This barrage of suits came just as Fitbit was about to make its first public offering as a company.
On September 6, Jawbone petitioned the commission to review Lord's findings, prompting last week’s decision.
“Having examined the record of this investigation, including the ALJ’s final ID, the petition for review, and the responses thereto, the Commission has determined not to review the final ID,” said Secretary to the Commission Lisa R. Barton in the Oct. 20 termination notice. “This investigation is therefore terminated.”
In a statement issued after Lord’s Aug. 23 ruling, Fitbit CEO James Park said: “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.”
Jawbone and Fitbit are still battling over patent infringements and trade secrets in California state courts. Tuesday in United States District Court of the Northern District of California, San Jose Division, Judge Edward J. Davila denied Fitbit's motion for sanctions against Jawbone. Fitbit argued Jawbone was liable for attorneys’ fees, which would have required a declaration of “bad faith” against Jawbone’s legal counsel.
“While the court detects inconsistencies in Jawbone’s position and seriously questions its decision to file the MSJ based on the available evidence, it is not convinced that these actions are sufficient to constitute bad faith,” Davila said in his statement.
As a result, a follow-up hearing on Oct. 27 has been vacated.