A federal grand jury has ruled a criminal indictment against five former employees, and one current employee, of the San Francisco based Fitbit Inc. The employees are being accused of taking trade secrets from their former employer, Jawbone, a rival company of Fitbit.
The indictment that was filed on Thursday in the federal court of Northern California stating that these employees received the stolen trade secrets after leaving Jawbone and they were aware that they were not supposed to have them.
Jawbone’s parent company, AliphCom, Inc, is no longer in business, and Jawbone is currently going through liquidation proceedings. Both the companies were into fitness gadgets and were staunch early competitors. In the past, they had sued each other quite a few times.
Other than the lawsuit against employees of Fitbit, the company is stuck in the middle of some other issues as well. The company made its debut in the New York Stock Exchange approximately three years ago, and since then its stock price has collapsed. The company has lost over $380 million between 2016 and 2017, which nullified its two earlier profitable years. The number of devices the company sold took a plunge from 22.2 million in 2016 to 15.3 million in 2017.
However, this won’t be the first time when the federal authorities are investigating Fitbit. Jawbone stated in a California state court filing that Fitbit was facing a criminal probe in 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.”
This statement made by the company seems to be addressing only the issue of potential wrongdoing by the company; however, it did not touch the issue related to the accusation made against its current and former employees.