Fitbit Climbs After Winning Ruling Over Jawbone In Patent Fight
Shares of Fitbit (FIT) climbed in morning trading after a judge ruled that the health and fitness device company did not steal rival Jawbone's trade secrets. Jawbone previously accused Fitbit of patent infringement and poaching employees who brought along confidential data.
ITC RULING: Fitbit said yesterday afternoon that U.S. International Trade Commission judge Dee Lord determined that Fitbit did not steal Jawbone's trade secrets and that there had been no violation of the U.S. Tariff Act because "no party has been shown to have misappropriated any trade secret." Fitbit Chief Executive Officer James Park stated on Tuesday that Jawbone's allegations were without merit and an attempt "to disrupt Fitbit's momentum to compensate for their own lack of success in the market." The complaint originally accused Fitbit of infringing on six patents, but all of these were either invalidated or withdrawn ahead of the trial, except for the claim that Fitbit had poached Jawbone employees, who proceeded to download confidential information and present it to Fitbit.
WHAT'S NOTABLE: Yesterday's ruling follows a victory for Jawbone in a separate trade case filed against the company by Fitbit. In late July, an ITC judge ruled that the three Fitbit patents asserted in the company's dispute with Jawbone were invalid, and that the case should be canceled "in its entirety," Bloomberg reported, citing a notice from the Commission. Fitbit commented that it would "continue to assert its IP against Jawbone as appropriate to protect the innovations central to our product offerings."
WEARABLE DEVICE DATA: According to research firm IDC, Fitbit had almost 25% global market share of the wearable-device market at the end of the first quarter, while Jawbone did not make the list of top five wearables vendors. On August 2, Fitbit said it sold 5.7M devices in the second quarter, up from 4.5M in the previous year. The company said Blaze and Alta comprised 54% of its revenue. On August 34, Longbow analyst Joe Wittine estimated that Fitbit can sell up to 109M devices in 15 key countries outside of the U.S. The company has sold about 50M of its fitness trackers so far, with about 70% of the sales occurring in the U.S., Wittine noted.
OTHER WEARBLE DEVICE MAKERS: Other makers of wearable devices include Apple (AAPL), Garmin (GRMN) and Samsung (SSNLF).
PRICE ACTION: In morning trading, Fitbit is up 2% to $15.18. Shares have risen more than 18% over the last month.
Disclosure: None.