Fitbit employees charged with stealing trade secrets from competitor Jawbone | Hacker News Reader

Fitbit employees charged with stealing trade secrets from competitor Jawbone

mercurynews.com

209 pointsburkhardtferep113 comments

> Six current and former Fitbit employees were charged in a federal indictment Thursday filed in San Jose for allegedly being in possession of trade secrets stolen from competitor Jawbone, according to information from the Department of Justice.

Wht makes this a criminal matter as opposed to a civil one?

Stealing is criminal?

Not all types of stealing is. IP theft is not criminal for instance.

Theft of trade secrets is a specific criminal offense: 18 U.S. Code § 1832 - Theft of trade secrets (https://www.law.cornell.edu/uscode/text/18/1832)

What about release trade secretly publicly instead of stealing them?

Doesn't that still require theft?

Stealing money from a bank and giving $100 to the next N people you see doesn't negate the fact that you stole the money from the bank. It just makes it harder for you to give it back.

Just because one can make an analogy doesn't make it illegal. We'd have to read and understand the laws.

But to your point: IMO theft is not a good analogy for this. It's not theft, its inflation.

In the bank scenario the bank would still have a copy of the $100. And so would everyone else. It's true, copying money devalues it - just like openly spreading a secret does - so everyone has less than $100 inflation adjusted dollars.

Theft is not a good term for this. I think the crime should be called "Spread of trade secrets"

It is a stretch. We're talking about a bunch of people in a failing company going to work for a competitor so they can continue their careers. Happens all the time and there's nothing wrong with it. Unfortunately, some aggressive entity in Jawbone has gotten busy filing lawsuits, there was one in 2016 against the same people that failed.

I don't see what good it does NOW to go after these individuals criminally, nor is there mention on who has been pushing this. Jawbone was liquidated in 2017. Who, actually, cares at this point? What do they stand to gain with these charges?

> What do they stand to gain with these charges?

A federal prosecutor gets to beef up their numbers by getting some well paid tech workers to settle out of court for a few years salary spread over a few decades of payments.

Interesting, thanks. One thing, the penalty listed here says:

(b) Any organization that commits any offense described in subsection (a) shall be fined not more than the greater of $5,000,000 or 3 times the value of the stolen trade secret to the organization, including expenses for research and design and other costs of reproducing the trade secret that the organization has thereby avoided.

But the penalty discussed in the article is up to 10 years in prison $250,000 in fines.

Is there a different statue at play here?

Right above (b):

> shall, except as provided in subsection (b), be fined under this title or imprisoned not more than 10 years, or both.

ah, so different penalties depending on whether it's an individual or an organization, but same statute. thanks.

Simply because there are federal laws criminalising industrial espionage itself beyond the component crimes of burglary, trespassing, etc. See the EEA, passed in the mid 90s, and some recent expansions of its powers.

I don't know why you are being downvoted. That is a very legitimate question. I would think that since trade secret theft is really simply a violation of a private contract, that it should therefore simply be a civil offense. However, it seems that the people who made the U.S. Economic Espionage Act of 1996 [1] (which is what made theft of a trade secret a federal crime) and of The Defend Trade Secrets Act of 2016 [2] (which strengthened that) believe otherwise. From the title of those acts, I'd guess they argued it should be a federal crime because of the risk of foreign entities gaining US company knowledge and/or harm to US economy in general.

[1] https://en.wikipedia.org/wiki/Economic_Espionage_Act_of_1996 [2] https://en.wikipedia.org/wiki/Defend_Trade_Secrets_Act

The timing is interesting, assuming it took a few years in draft before being voted to pass. According to a "Jose Canseco" like book called Confessions of an Economic Hit Man, the USSR would frequently attend international trade shows and directly purchase/bribe/steal technology from westerners. But only after the fall of the union did it become a criminal act for an American commit.[0]

Then again, this was also the first period when technology really became ubiquitous. Perhaps it just reflects the spread of tech.

[0] of course treason / violation of oath was a crime, I'm just curious if anyone more versed in history than I can provide more insight.

The late 80s were all hysteria about Japanese firms taking over America. You can see it in a lot of books and films from the era.

There's a really quite odd film called Rising Sun with Sean Connery and Wesley Snipes that has corporate espionage as part of the plot. 1993 release, which was actually just after Japan's economy slowed down.

The original Rising Sun book by Michael Crichton is a good read if you didn't know about it. Haven't seen the movie.

It's a good read, but also full of wild mischaracterizations of Japanese culture.

The original book was published in 1992, and the writing rate for the author at that point was about two years for each novel, so the idea probably originated around 1990.

upvote for the Jose Canseco reference haha

The downvotes are because theft of trade secrets is a crime.

https://www.law.cornell.edu/uscode/text/18/1832

It’s not any more a contract case as stealing a rental car would be. It’s not a contract dispute, it’s a violation of a federal criminal statute.

Not to mention a public company ($FIT) being involved - potentially exposing a broader audience of investors to indirect exposure of the act, potentially causing ripple effects in a public market.

> The downvotes are because theft of trade secrets is a crime.

That is not a legitimate reason to down vote a question.

Sometimes I wish downvotes required a mandatory reply.

Downvoted because I don't agree

(I did not really downvote but you get my point)

Ah yes and then downvoting them might be hell. If only there was a good way to determine when to force someone to reply when downvoting.

They do require a certain karma threshold which is supposed to prevent people without sufficient context in the HN community from downvoting a bunch of stuff. I also think if you downvote beyond a certain threshold in a certain period of time it stops counting them (to prevent flame threads from devolving into everyone destroying everyone else's Internet Points perhaps).

Perhaps the karma threshold needs to be increased.

So only people who can downvote are those that agree with each other? Surely a cursory examination of unintended side-effects was done - it is HN, right?

A mandatory comment as to why someone -1'ed a post should be mandatory. Unless someone is intentionally being abusive/troll, then perhaps we should engage in the lesser popular viewpoints. Not doing so creates one hell of an echo chamber.

EDIT: currently at -1. You're only proving my point, buddy.

You can't downvote replies to your comments. So you are at -1 with no influence on my part. :)

I'm not sure mandatory comments would solve the problem. We'd get plenty of the "I disagree." comments. Could those then be downvoted? Does downvoting those upvote the parent? Could I downvote both. Etc.

I don't know the current threshold but increasing it doesn't create an echo chamber. Look at any thread about gun control in the US and you will a lot downvoted comments on both sides and presumably a lot of highly upvoted comments on both sides as well. Not only that but you can only downvote comments until they reach a certain age. You can upvote them much longer (perhaps forever?). This creates a bias toward increasing votes which itself is a good reason to occasionally adjust the thresholds.

How about stats, similar to serverfault and stackexchange, where you can see how many times the person has upvoted and downvoted?

I don't think the threshold is cutting it anymore - I've noticed a lot of reddit-like behavior with people downvoting things they don't like or agree with rather than things that don't contribute to the conversation; this is balanced out by other people but it's not something that I saw happen 1-5 years ago.

   ... because theft of trade secrets is a crime.

That's an answer to the (perfectly reasonable) question, not a sensible justification for a down vote.

Potentially because it could be considered a conspiracy? I can't say for sure but it would make sense. There is probably more information that will be released. I probably still have trade secrets from my previous employer stashed away on a hard drive that I forgot about. But I am not going to a competitor either so I am not concerned.

Maybe because this isn't petty theft?

Not all IP theft is considered criminal, so OP is asking a legitimate question. Sometimes it's only civil, like patent infringement or trademark infringement. Other times it can be criminal, like trade secrets (only recently it appears?) and copyright violations.

Yes, I understood it to be a legitimate question. That is why I gave a legitimate answer. The difference between civil and criminal theft is where there is a criminal statute covering the theft that the prosecutor believes was broken.

I'm not sure what petty theft has to do with any of this, though. That's also a crime, and isn't related to the question of whether this issue is a criminal one or purely civil.

I would guess because whatever group of politicians drafted whatever laws are relevant here were given money by corporations who would very much have liked to criminalize the possession of their secrets. Locking up your competitors is great for business.

theft == crime.

I just stole your idea.

theft != crime

> I just stole your idea.

i feel like this may be a category error; it's not clear that "idea" is something which can "be stolen".

at least not in a way that seems similar to (for example) having your car stolen.

subtlety, a lost, and now down-voted, art.

As much I hate to admit it, I have no proof that it was infact my idea. So there’s not a damn thing I can do about it :(

But, if I had in fact patented a practical implementation of my abstract idea, or my idea itself was about a practical implementation of a thing and it was patented, and you stole it, we’d have loads of fun doing a tango dance at the local courthouse. Assuming of course that I could afford the lawyer to dance on my behalf, considering my terrible dancing skills.

If I had to guess it'd be the existence of a criminal statute penalizing the behavior

This is a BS attempt by Jawbone's management to screw over a former competitor by going after their employees. As if any of these "trade secrets" are the reason Jawbone is in liquidation. A federal indictment?? Are you kidding me?

I would bet the reason Jawbone went this route is because their lawyers properly informed them that California's right to work laws would have a civil case thrown out in no time. So now we have a bunch of feds involved who need to reach their quarterly quota of prosecutions and these poor employees are going to go broke defending themselves in court.

Everyone at Jawbone can seriously go to hell.

Not arguing with you, just sincerely asking: how can Jawbone control what the DoJ does? They can claim a crime has been a committed, but that’s a long way off from actual indictments getting handed down.

I'm not implying Jawbone has the same influence as Goldman Sachs but corporations have heavily influenced cases (imo) like this before.

https://www.reuters.com/article/us-goldman-sachs-aleynikov-f...

> how can Jawbone control what the DoJ does?

This likely started with Jawbone complaining to the authorities and then co-operating with the investigation. OP’s characterisation of these indictments as “a BS attempt by Jawbone's management to screw over a former competitor” would appear inchoate given the text of the indictments hasn’t yet been released.

There is a great deal more pettiness and personal vendetta in "prosecutorial discretion" than anyone wants to admit. I have no details on the specifics of this case, but it's certainly not a stretch to imagine that there is some back-end connection that gave a special-enough glimmer to this case for the DoJ to pursue it this way.

That's not to say there aren't people who are essentially random victims of "prosecutorial discretion". Lawyers need something to do all day, and sometimes that thing is finding people to prosecute.

There is of course the third possibility, however unlikely, that the accused engaged in truly reprehensible and brazen theft of their former employer's intellectual property, showing such wanton disregard for civil society that they deserve to be deprived of their freedom and placed in a cage for several months, and then marked as ex-cons the rest of their natural lives. I would say there's a pretty miniscule chance of this being the case, but again, I don't know any of the details.

I'm curious, what was your original response to Google suing Uber re Anthony Levandowski?

I can't answer for the parent but to me these two situations are not really comparable. Making self driving cars is cutting edge technology and I can definitely believe that having access to a competitor's engineering secrets could be a huge advantage. For something like fitbit I'm not so sure, it's mostly existing technology. I suppose "market research" can be valuable though, but the article doesn't offer enough details to figure out what that means exactly.

It's hard to know for sure without knowing exactly what Jawbone thinks has been stolen.

> As if any of these "trade secrets" are the reason Jawbone is in liquidation

What does this have to do with anything? Whether or not they are the reason jawbone is finished is irrelevant.

California is not a right to work state.

Who the fuck is approving this failed company's lawyers to waste any more of the quickly disappearing money this company still possesses?

If you steal materials (source code, diagrams, pictures, documents) it's theft especially if you can prove it was removed. If you just go work for a competitor and you know stuff (i.e. in your brain) how do you prove its theft? As far as I know many employers employment agreements are hard to defend especially in certain states. I once had an employer require me to sign a contract stating I could not buy anything from any vendor they used. When I pointed out they purchased things from Walmart did they mean I couldn't go to Walmart any more? I signed it with this clause removed.

on a side note, relevant xkcd: https://xkcd.com/294/

This is bizarre to me.

Xiaomi has been making fitness trackers that are dramatically better than Fitbit's low-end for years:

  - 1/4-1/3 the price
  - 4x+ battery life
  - waterproof
  - more reliable, at least for me (my Flex required 2 replacements in 6 months)

I've been amazed that Fitbit has been able to succeed despite this. I assume people really like the social aspects of the software, which Xiaomi doesn't really do.

If Fitbit had to steal secrets to produce such an inferior product, how the heck did Xiaomi do this? Did they kidnap people from Jawbone (or someone else) and enslave them?

I guess comparatively few people know of Xiaomi's fitness trackers. I didn't until reading this comment.

There's also a lot of fear of Chinese-made devices.

> If Fitbit had to steal secrets to produce such an inferior product, how the heck did Xiaomi do this? Did they kidnap people from Jawbone (or someone else) and enslave them?

I am similarly curious as to any technical reasons why this would have been considered "necessary".

Possibly someone felt a development death march? Of course, it's entirely possible that Fitbit didn't need to, that this was a matter of lack of morals and some odd combination of laziness, stupidity, and hubris.

The corporate version of a guy who shoplifts a $5 widget but has a wad of cash in his pocket. Sometimes criminals are just stupid.

>I've been amazed that Fitbit has been able to succeed despite this. I assume people really like the social aspects of the software, which Xiaomi doesn't really do.

Because it is a Chinese company, and thus, it is "uncool"

I think this is another exemplary case of Chinese company with a superior product being greatly weighted down by its "Chineseness" in Western markets.

I have a Mi Band, it is great and has amazing battery life (30+ days). The main reason they are rare in the US is that they are neither marketed or sold here by Xiaomi. You have to get them via third party importers.

> I think this is another exemplary case of Chinese company with a superior product being greatly weighted down by its "Chineseness" in Western markets.

Or this comment is an example of blaming bad marketing on racism..

>Because it is a Chinese company, and thus, it is "uncool"

More like Xiaomi is a weird word to Western ears and eyes, while FitBit is intuitive to pronounce and its rhyming is pleasant to the ears.

Marketing 101: Pick a name for your product that's easy for your customers.

I think there is no shortage of Chinese brand dishing out sums in millions of USDs to all kinds of top tier marketing consultancies just to discover that "uncoolness" stigma keeps chasing them through rebrandings, regardless of how much star CMOs they hire.

As for Xiaomi, they are quite frequent on pages of trendy journals there and there with sponsored articles, yet if you ask an average reader if they even noticed it, most will say no.

They just have to come up with a better brand. Outside of China, "Xiaomi" is not an easy word.

There are innumerable examples of Japanese companies that changed their names to make them easier to market. Panasonic, for example.

More recently out of Korea, look at the rebranding of Lucky Goldstar as simply "LG." Worked wonders.

There are plenty of Chinese brands that are successful in the West. But they are always brands that are appealing to the Western ear. Vizio. Element. TCL. All better names than "Xiaomi."

I suppose that's why nobody buys Samsung phones, Haier refrigerators, Mitsubishi automobiles, etc.

> The theft of trade secrets ... stifles innovation

If only there were an example of an industry where innovation thrives as a result of sharing knowledge instead of keeping it secret.

Knowledge sharing is often good but stealing trade secrets isn't really the same thing (just imagine a large corp stealing trade secrets from a startup and you'll see how it could stifle innovation)

My point was that if you look at the world of IT, you see that a lot of knowledge is shared and open sources. Looking at classical businesses you’d think that sharing is a bad idea though. What I find stifles innovation is keeping all sorts of knowledge locked up in big companies, how does that help mankind?

Keeping all knowledge locked up would stifle innovation but not having trade secrects at all would also stifle innovation. Even IT orgs need some of their stuff to be proprietary sometimes

Do we know any details about what specific trade secrets were “stolen”?

This is legitimately scary to me. If I change jobs how do I know what the line is between applying past experience and copying trade secrets?

Did you copy files and take them with you? Or do you just remember things that you then apply? If it's the latter you're probably safe.

Probably safe from a maximum of 10 years jail and 250k in fines is still scary to me.

The fact that this is a federal crime disappoints me. This really should be civil.

I cannot comment on this case (and yet, here I am typing) but I will say this:

I put up with the unreliable, fragile, jawbone up for years. I think I went through about 5 or 6 models personally and got several for my family members.

Why?

Because it had, by far, the best sleep tracker of anyone on the market. I could finally see how much sleep I got and it had a huge impact on me.

Fitbit has finally caught up about a year or so ago. (I was only tracking this as a consumer so not sure exactly).

I would be very interested to know if the alleged theft was related to sleep tracking. Specifically, if it was around figuring out when the user is in REM sleep, deep sleep, light sleep or awake.

Everyone else could not break out REM sleep and deep sleep.

I'm really skeptical that it's accurate even now.

> Everyone else could not break out REM sleep and deep sleep.

As someone who has worked with the engineers who implemented this on another product, anything except for the most broadly defined categories is exaggerating.

We worked with multiple sleep labs to do controlled sleep studies on people. The way one of those sleep studies worked was a bunch of doctors looked over all the charts of data that had been gathered, and then voted on what type of sleep the subject was getting at different points in time!

Give the same data set to a different set of doctors and you'll get a similar, but somewhat different, result from their analysis.

With that in mind, it is not possible for a consumer grade wrist worn device to give absolute results.

With just an accelerometer, you can get very broad categories, that are easily confused with someone sitting very still while watching the entire LOTR trilogy.

Add in a HR sensor and you can get some slightly better data.

Now not to say these results aren't good enough to be actionable. You'll notice differences in the graphs for making healthy lifestyle changes, heck I was able to see a before/after change on my data by skipping the after dinner gin and tonic, so existing consumer sensors can detect stuff. But anyone claiming whole lot of granularity is over stating their results.

(Unless the state of the art has vastly moved forward in... oh 2 years or so, but given how messy all the sleep studies I saw were, I doubt it!)

Very interesting.

I have noticed that my baseline REM (or should I call it “REM”) was different for the two (Fitbit and Jawbone) but if it’s lower than baseline on either device I feel dramatically worse than usual and if I get higher than usual REM I feel better.

As you say, it’s detecting “stuff”

I think the story probably went something like this:

1. Fitbit steal hires Jawbone employees. 2. Jawbone retaliates by charging everyone who left Jawbone to join Fitbit for stealing trade secrets.

Never seen these NDAs actually be successfully prosecuted. There must have been some emails or something where they were clearly sharing IP and leaving a papertrail.

I wonder what was actually stolen.

I hope this is not the reason why Jawbone is undergoing liquidation and Fitbit IPOed.(I'm sure there are many more reasons, but it'd be shocking these stolen trade secrets were contributing factors).

Jawbone has already sued Fitbit over this case I believe. That case was settled:

https://www.wareable.com/fitbit/jawbone-fitbit-legal-dispute...

The settlement was regarding patents. From your link:

Last year a judge ruled in Fitbit's favor, stating that "no party has been shown to have misappropriated any trade secret." The fight rumbled on over some patents, but now it's all over, as Fitbit announced in a statement.

It started as a trade secrets case that was dismissed and Jawbone tacked on patents and that was settled. Full disclosure, I work at Fitbit. Since we are not a party to this new case I can at least talk about the public info with the old one!

Maybe they stole the plans to make speakers that crap out after a year. ¯\_(ツ)_/¯

Jawbone is going out of business because their really only mass-market success story, Jambox, had its run and now the bluetooth speaker market is dominated by better competitors.

Who would take anything from that company? Their software was basically limited to utility apps and companion apps to the hardware. What did these employee's take? The precious InstallShield firmware updater code? I hear they finally fixed the issue with bricking their devices after a few years so that code has to be super valuable..

Does anyone have a copy of the indictment by any chance? I can't find it anywhere...

What's the chance that we'll find out, even vaguely, what was allegedly stolen?

Is this an end run around the California law that non competes are unenforceable?

Wow, 10 years in jail!

Be careful, friends.

This is probably the reason why most valuable employees are transferred to Switzerland or United States or why big companies choose to develop IP in the US.

Stealing your employer's trade secret can trigger federal investigation.

It's shocking how few employees know this.

Once I met employees who would copy over the propriety packages from their old employers to their new employers just to save some time.

The other time i met employees who would develop a system the exact same way as they had done at the previous employer.

This is probably the biggest risk which specialized employees do not recognize while job hopping.

> The other time i met employees who would develop a system the exact same way as they had done at the previous employer.

Ugh.. this is called experience, and it is why companies hire senior developers

(Copying code is not acceptable, that I agree with..)

One would hope the new system would be improved over what was developed previously, not copied from memory verbatim.

Snark aside, that's what non-compete agreements are for. I don't believe we've reached the stage where employer can lay claim on your experience. If anyone knows any good Sci-Fi exploring this theme, would be thankful for a pointer!

Paycheck - I haven't read the book but, in the movie [1], the main character has his memory wiped back to the initial state after working on trade secrets.

[1] https://en.wikipedia.org/wiki/Paycheck_(film)

William Gibson’s Sprawl trilogy, but especially the second book, Count Zero, revolves around helping a scientist move from one Corp to another.

Thankfully, most non-compete agreements are not valid under California law, so we actually have a free market for labor.

What is the actual crime??? Changing jobs?

No, possession of trade secrets. Article claims the investigation took two years, so there's more to it than just changing jobs.

Curious why Google hasn't persued a criminal case against Levandowski for the Otto/Uber IP theft?

Where have you been because this has been ongoing for like a year now?

Waymo did sue Uber and there was a settlement: https://www.forbes.com/sites/bizcarson/2018/02/13/everyone-w...

Sure, but that was civil not criminal.

Google can't file criminal charges, only federal prosecutors can.

What would cause them to initiate it? What initiated it in the Jawbone case?

Not sure if this is the same case, but Fitbit’s 10-K from a couple years back mentions an ongoing suit against them and some employees for the same thing.

https://www.sec.gov/Archives/edgar/data/1447599/000144759916...

CTRL+F on that page for “On May 27, 2015, Jawbone filed a lawsuit”

Generally the entity that believes their stuff has been stolen goes to the authorities to complain. Then someone there makes a determination whether or not to take up the case and ultimately prosecute.

In the Waymo v Uber case, the judge referred the case to the Dept of Justice. The DOJ then decides if they're interested in investigating. They still might.

Google can't do that. It's a decision made by a federal prosecutor.

P.S. IANAL.

Interesting. How would the federal prosecutor have found out about these people? Jawbone must have initiated in some way.

looks to be very similar story to Google/Lewandowski:

http://fortune.com/2017/02/07/jawbone-says-criminal-grand-ju...

"In the California lawsuit, Jawbone has accused Fitbit of hiring away at least five of its former employees, who it says brought with them hundreds of thousands of confidential files when they joined in 2015."

Looks like it was a smart move for Lewandowski when he took the 5th. These Jawbone/Fitbit employees seem to have chosen the other way:

https://www.fool.com/investing/2016/07/15/jawbone-and-fitbit...

"Fitbit says it never accessed any of the files in dispute, or used them for any of its products. The Fitbit employees in question did turn over 18,000 files to the California Superior Court that belonged to Jawbone."

Could they please steal some trade secrets to make their batteries last longer than six months? Ugh.

According to this data from Statistica, https://i.imgur.com/Sbp9oCX.png (I do not have a paid account so I cannot view the source), Fitbit's market share is ridiculously large compared to jawbone, who have decreased from 19% to next to nothing. This is both due to new players and an increasing number of fitness trackers sold.

Jawbone doesn't even exist anymore (at least not as the original hardware company), so I don't understand what point are you trying to make.

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