Lisa Eadicicco Six former and current employees of Fitbit were ​charged in a federal indictment for possessing trade secrets stolen from rival Jawbone, according to a statement from the Department of Justice on Thursday. The indictment filed in San Jose, California, alleges each defendant was aware that the trade secrets were stolen and that they were being possessed without authorization. The individuals had all worked for the now-defunct San Francisco-based Jawbone, owned by AliphCom Inc., for at least a year between May 2011 and April 2015, before being employed by Fitbit, it said. Each of them has been charged with one or more counts of possession of trade secrets and is scheduled to make an initial court appearance on July 9, the DoJ said. Jawbone sued Fitbit in May 2015, just weeks before the wearable device maker's IPO, alleging Fitbit engaged in a clandestine effort to steal talent, trade secrets and intellectual property. However, the companies reached a global settlement agreement resolving all outstanding litigation in December 2017. A Fitbit spokesman responded by pointing to a 2016 case involving the same individuals and said a federal administrative law judge found that "no Jawbone trade secrets were misappropriated or used in any Fitbit product, feature or technology."<doc-sep>A federal grand jury has returned a criminal indictment against one current and five former Fitbit employees, accusing them of taking trade secrets from their former employer, Jawbone, to their new jobs at Fitbit. Jawbone went out of business as of July 2017 and is currently undergoing liquidation proceedings. The two fitness gadget companies were previously staunch competitors and had sued one another multiple times. On its own, Fitbit has its own problems, too. The company's stock price has collapsed since its $32.50 per share debut on the New York Stock Exchange roughly three years ago. Today, Fitbit stock trades at around $7.42 per share. Fitbit has lost more than $380 million from 2016 through 2017, wiping out its two earlier profitable years. Its number of devices sold has plummeted from 22.2 million in 2016 to 15.3 million in 2017. This is not the company's first brush with federal authorities. In February 2017, Jawbone said in a California state court filing that Fitbit was facing a criminal probe into its behavior. At the time, Fitbit denied any wrongdoing. "After a full examination of the issues and Fitbit’s resounding victories at the [United States International Trade Commission], coupled with Jawbone’s complete failure in the marketplace and reported insolvency, Jawbone is now attempting to exert leverage against Fitbit in civil litigation pending in the California state court," Fitbit said in a February 2017 statement sent to Fortune. "Fitbit is cooperating with the US Attorney’s Office to demonstrate, once again, that these allegations are without merit." However, that statement appears to only be addressing potential wrongdoing by the company itself and not its current or former employees. In Fitbit’s most recent annual report, filed with the Securities and Exchange Commission on March 1, 2018, the company wrote: On August 12, 2016, the Company was notified by Jawbone that Jawbone had received a confidential subpoena from the US Attorney’s Office for the Northern District of California requesting certain of the Company’s confidential business information that appeared to be related to Jawbone’s allegations of trade secret misappropriation. On February 17, 2017, the Company received a subpoena for documents from the same office. On February 1, 2018, the Company received a second subpoena for documents. The Company is cooperating with the US Attorney’s Office. Back in 2015, Jawbone filed a lawsuit against Fitbit over poaching its employees and a patent lawsuit for good measure. Jawbone faced other business challenges, too. Advertisement “Stifles innovation” The named defendants include six former and current Fitbit employees: Katherine Mogal, 52, of San Francisco; Ana Rosario, 33, of Pacifica; Patrick Narron, 41, of Boulder Creek; Patricio Romano, 37, of Calabasas; Rong Zhang, 45, of El Cerrito; and Jing Qi Weiden, 39, of San Jose. Mogal faces six counts, while Weiden only faces one—the others range between two and five counts. It was not immediately clear which of these six is the current Fitbit employee. According to their LinkedIn profiles, Rosario and Narron left the company years ago. Authorities say each had worked for Jawbone for at least a year between May 2011 and April 2015 and allegedly violated their confidentiality agreement. While working for Jawbone, they were seemingly recruited to work for Fitbit, and, prosecutors claim, took trade secrets along. "Intellectual property is the heart of innovation and economic development in Silicon Valley," said Acting US Attorney Alex Tse in a statement. "The theft of trade secrets violates federal law, stifles innovation, and injures the rightful owners of that intellectual property. This office, together with our law enforcement partners, is committed to protecting the intellectual property rights and economic security of this district." The defendants are scheduled to make their first appearance in court on July 9, 2018, at 1:30 pm before US Magistrate Judge Virginia K. DeMarchi in San Jose. Abraham Simmons, a spokesman for the US Attorney's Office in San Francisco told Ars that due to a "clerk's office issue," the indictments would not be available until Friday. “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," the company said in a statement sent to Ars by Scott Lindlaw, a spokesman. Fitbit declined to respond to Ars’ questions on the record late Thursday evening. UPDATE 1:09pm ET: Simmons sent Ars a copy of the indictment, which we have published here.<doc-sep>Photo : Alex Cranz ( Gizmodo ) One current and five former Fitbit employees accused of knowingly stealing trade secrets from former employer Jawbone, which ceased operation in 2017, have been indicted. The two companies have gone to court in the past over similar allegations. If convicted, the defendants could face up to 10 years in prison. Advertisement According to a statement from the U.S. Department of Justice obtained by Ars Technica, the six former Jawbone employees who migrated to Fitbit allegedly violated confidentiality agreements with Jawbone, and knowingly possessed trade secrets from the company. Four of the six defendants worked for Jawbone between May 2011 and April 2015, and received employment offers from Fitbit between March and April 2015. One defendant resigned from Jawbone in March 2014, and began working for Fitbit later that year. The indictment alleges that the six defendants were aware that they were walking off with trade secrets they weren’t supposed to have. “[Homeland Security Investigations] has devoted more than two years to investigating these allegations of the theft of trade secrets,” said HSI Special Agent in Charge Ryan L. Spradlin in the DoJ statement. “HSI considers these types of charges extremely serious, and is dedicated to safeguarding against any illegal corporate practices adversely impacting other businesses.” The defendants are scheduled to appear in court July 9. Jawbone and Fitbit’s contentious relationship, rivaling the conflict between Samsung and Apple, has embroiled the companies in lawsuits with one another for years, with the former accusing Fitbit of repeatedly poaching employees and obtaining confidential information in the process, and the latter accusing Jawbone of patent infringement. Fitbit previously dismissed theft of trade secrets allegations made by Jawbone in an earlier lawsuit as “fictional.” If this week’s indictment can be seen as a victory for Jawbone, its a relatively hollow one. Last year, Jawbone went out of business, and liquidated its assets, so it’s not as if Fitbit losing means a big win for the now-defunct company. [Ars Technica]<doc-sep>
Andrew Hoyle/CNET Remember Jawbone? The Fitbit rival, which went out of business last year, claimed repeatedly that Fitbit had stolen its trade secrets. Now Jawbone is about to get its day in court, again. One current and five former Fitbit employees have been indicted in US District Court with possessing Jawbone trade secrets. The indictment was issued Thursday in the Northern District of California in San Jose. The defendants worked for Jawbone between 2011 and 2015, according to the indictment, and all accepted job offers from Fitbit during or right after their employment with Jawbone. If convicted, they will be fined and face up to 10 years of imprisonment. Jawbone filed three lawsuits in 2015 claiming that Fitbit lured away employees specifically to steal trade secrets and learn about its supply chain and financial data. In October 2015, a San Francisco judge ordered five Fitbit employees to return confidential information they took before leaving Jawbone. Thursday's indictment alleges the six employees took a variety of confidential documents, such as "schematics, design specifications and detailed description" of an unreleased headphone, emails and design documents related to different headphones, financial profit and loss forecasts and an in-depth, proprietary study of more than 1,400 Jawbone users. The defendants received these documents "knowing them to have been stolen and appropriated, obtained, and converted without authorization ... for the economic benefit of someone other than Jawbone," according to the indictment. The two companies had waged multiple legal battles over the years, including a case before the International Trade Commission against many of the same Fitbit employees. In that case, "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 Fitbit spokesman said in an email statement. Cambridge Analytica: Everything you need to know about Facebook's data mining scandal. Tech Enabled: CNET chronicles tech's role in providing new kinds of accessibility.