Jawbone bites back: Fitbit loses three patents (updated)

The wearables war continues, and the Law of Unintended Consequences seems unbreakable. This one was decided in a US International Trade Commission court, with the judge ruling that the three patents in question “don’t cover ideas eligible for protection” and dismissed the August trial between Fitbit and Jawbone. This is a reversal of fortune for the two competitors as a similar patent challenge to Jawbone was won by Fitbit back in April in the same court. In the new ruling, the judge said that Fitbit “seek(s) a monopoly on the abstract ideas of collecting and monitoring sleep and other health-related data.”

The skirmishing has a deeper context. Jawbone has accused Fitbit of hiring former employees and purloining trade secrets like product design and marketing plans, and alleges that the suits were “brought improperly by Fitbit in an attempt to burden Jawbone with having to defend invalid patents in multiple venues.” Fitbit reportedly has 300 patents, so that is a lot of defending for a company that has issues of its own.  Jawbone has struggled in past months with its products, with various (and contradictory) reports indicating it’s exiting the wearable business, working on a new wearable and selling its audio business (which has also been crushed by competition.) Undoubtedly this will continue as Fitbit plans to challenge the ruling. Your Editor suspects that their legal and IP offense/defense activity is a substantial budget line for them. Bloomberg (20 July and April), The Verge

Update: Jawbone is rumored to be up for sale, with reports that they have approached at least one hardware manufacturer about a purchase. Reportedly they missed an August payment to a business partner. Investor BlackRock has marked down their shares, formerly valued at $5.97 a share, to less than a single penny. Since 1999, Jawbone has had funding of over $900 million.  9to5Mac, The Verge  Even the much-publicized hiring of high-profile exec Adam Pellegrini from Walgreens to Fitbit to lead digital health has a Jawbone twist, as both the former and latter were partners. MedCityNews

Finally a curb on ‘patent trolls’? (US)

[grow_thumb image=”http://telecareaware.com/wp-content/uploads/2013/09/TROLLS-1992-008.jpg” thumb_width=”150″ /] Those nasty patent trolls–those (largely) non-practicing entities (NPEs) which buy up patents to license them. Yet most of their revenue stream comes from pouncing on startup and early-stage companies to challenge their patents and systems, extracting la mordida to avoid further legal action. Now the Federal Trade Commission (FTC) has moved to curb one egregious practice: deceptive demand letters. The FTC issued an order to MPHJ Technology Investments LLC (MPHJ) banning its allegedly deceptive letters to companies which MPHJ considered to be infringing on its scanning technology. MPHJ filed first a draft complaint, and now a legal action against the FTC in the US District Court for the Western District of Texas, alleging violations of the First Amendment on free speech. Under US law, ‘deceptive’ may not be good enough–their letters threatening lawsuits must be shown to be ‘objectively baseless.’ The FTC requested dismissal of MPHJ’s suit this past Monday. Their rejoinder: the suit would disrupt its work.  National Law Review, Law360 (subscription/Lexis Nexis access required).

Previously in TTA on patent troll strategies and how companies defend themselves:  TTA 13 Sep 13, 10 Feb 13. (Also search on ‘patent troll’, ‘MMRGlobal’ and ‘patent infringement’.

How startups are being damaged by patent trolls–and turning the tables

[grow_thumb image=”http://telecareaware.com/wp-content/uploads/2013/09/TROLLS-1992-008.jpg” thumb_width=”150″ /]In February and for a few months, this Editor was on a tear about the quaintly dubbed patent trolls–primarily (but not always) non-practicing entities (NPEs) which don’t create or market products, but buy up other people’s/companies’ patents and then seek out opportunities to license them. These NPEs target and challenge vulnerable startups and early-stage companies to defend their patents and systems; the suit for royalties, the financial threat, the papers filed, the attorneys called, the money spent and the eventual settlement (or licensing) is in reality just a form of what’s called in Latin America la mordida. It becomes cheaper to settle than to fight–and the cost can be six or seven figures. 

The shots over the bow were in 2012: Bosch’s February lawsuits against Waldo Health, ExpressMD/Authentidate and MedApps (now Alere Connect) [TTA 16 Feb 2012] and then the strange practice of PHR developer/patent accumulator MMRGlobal [TTA 23 Oct 2012] in sending hundreds, perhaps thousands, of letters out to EHR/EMR users to advise them of possible patent violations and demanding licensing. This Editor observed then and during the spring this year that it was only a matter of time that NPEs would pounce on healthcare tech as investment action accelerated. Yet discussions by this Editor with companies in some public venues indicated a certain level of obliviousness to the threat–that there were not enough assets to go after, thus healthcare startups made poor targets–though side conversations with IP specialist attorneys indicated otherwise.

Well, the trolls have reared their fuzzy heads again, uglier than ever, in this drama-laced article in Wired. (more…)