Fitbit Inc (FIT) Gains Upper Ground Against Jawbone in Lawsuit

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The judge covering the Fitbit-Jawbone trade dispute has invalidated some of Jawbone’s patents, improving the outlook for Fitbit

Last week, Fitbit Inc. (NYSE:FIT) scored against Jawbone in the ongoing trade dispute when the judge covering the case ruled against some of Jawbone’s patent claims by declaring them invalid. Jawbone had previously filed a case against competitor Fitbit, claiming that the wearable technology maker had infringed multiple patents. It was trying to get the company’s products blocked from being imported in the US. Fitbit countersued, and both companies are bound to face similar repercussions if found guilty.

Jawbone’s patent infringement claims were found invalid, according to court documents, as they did not provide any innovative concept and instead sought monopoly over the very idea of collecting sleep and health data. The abstract nature of the some of those patents and the conclusion that they simply purport the use of computers for what used to be human activity is what made the infringement claims ineligible in court.

The development reflects a victory for Fitbit, which has been dealing with Jawbone’s patent infringement accusations as it stole trade secrets from the company by poaching its employees. As for Jawbone, which entered the wearable market five years back and failed to make much of a mark in it, the litigation is a chance to monetize off of Fitbit’s success. However, the two patents which have been dismissed represent a small subset of the many claims Jawbone has raised. Fitbit still has to contend with the accusation that it stole Jawbone’s trade secrets as well as the allegation that Fitbit used aggressive hiring tactics to damage the company’s business, contacting about 30% of Jawbone employees. Meanwhile, Fitbit also sued Jawbone for patent infringement in Federal Courts, including one in San Fransciso, over the technology used in its devices. 

Fitbit is currently the leader in the wearables segment with close to a 30% market share as it competes with larger rivals like Apple Inc. (NASDAQ:AAPL), whose competing product, the Apple Watch, has managed to gain only a 15% share of the wearable market. The company has rebounded from a tough year into 2016 with two new watches each of which sold one million units within a month of their release in March.

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