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Ex-Worker Stole 'Crown Jewels' Before Leaving Company

by Chris Brook on Tuesday January 28, 2020

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In a criminal trial, prosecutors for the now defunct fitness tracking company Jawbone are alleging the ex-employee stole studies the company considered its “crown jewels" before joining Fitbit.

Jawbone, a fitness tracking company, went out of business in 2017 but that hasn’t stopped legal proceedings involving the company's former employees from bouncing around the California court system.

Nearly two years after six former Jawbone employees were charged with stealing trade secrets before joining Fitbit, a rival fitness tracking technology company, a criminal trial focused on one of the employees has gotten off the ground in federal court in Northern California.

Last week, prosecutors told a federal jury that Katherine Mogal, who served as the Director of Market and Customer Experience Insights for Jawbone from 2013 to 2015, stole studies the company considered its "crown jewels" before joining rival Fitbit.

This isn't Jawbone and Fitbit's first legal kerfuffle. The International Trade Commission terminated an investigation into whether Fitbit Inc. stole trade secrets from Jawbone in October, 2016. Fitbit dropped a year old case in which it accused Jawbone of violating its patents in December of that year.

Jawbone, which at one point was valued at $3 billion, went out of business in the summer of 2017. The company produced some of the first wireless speakers and phone headsets before pivoting to fitness trackers. While the pivot was unsuccessful, the company's CEO and some of its staff formed a new health services company, Jawbone Health, soon after. For years, little was known about the company until a SEC filing in 2019 revealed that it managed to raise $65 million in funding.

On Monday, Travis Bogard, a former executive with the company, said that Mogal took valuable user and consumer insight studies when she left the company to work for Fitbit in 2015.

In her defense, Mogal's attorney claims the ex-employee, who now works for Google as the Head of UX Research on Google Assistant, forgot she'd automatically backed up the data onto a personal cloud account.

While that may have been the case – Thomas West, a Homeland Security special agent in charge of investigating the case claimed Friday that he found 51 files pertaining to Jawbone's IP on Mogal's cloud backup account - it's unclear if she ever actually accessed the files, let alone knew they were there, according to Law360.

Mogal was one of six ex-Jawbone employees indicted by AliphCom, Inc. – Jawbone’s original name when it launched in 1999 – two summers ago in a what its lawyers called a "clandestine effort" to steal talent, trade secrets and intellectual property. Mogal, along with fellow California residents Patrick Narron, Patricio Romano, Ana Rosario, Qi Weiden, and Rong Zhang, were all charged for being in possession of stolen trade secrets.

Each of the employees worked for Jawbone for at least a year between May 2011 and April 2015; four of the employees (Mogal, Rosario, Narron, and Zhang) received job offers from Fitbit between March 2015 and April 2015 - each accepted over the course of a month.

According to the indictment, some of the employees were more blatant than others when it came to taking data.  While Narron frequently sent confidential information to his personal email address, Zhang and Romano used portable USB storage devices to remove confidential information from Jawbone's systems.

Both Mogal and Rosario held intimate knowledge of Jawbone's business, and had access to studies commissioned by the company, customer perceptions, pricing information and analyses, information about the company's financial health and product strategies, in addition to insight to senior exec's decisions.

The indictment claims out that Mogal joined Fitbit to become the company's Head of User Experience Research, a position it created for her, due to the insights she gained from carrying out research at Jawbone. Once there, she hired Rosario.

For what it's worth, Bogard - who served as Jawbone’s VP Product Management & Strategy for six years and is now Samsung NEXT's SVP, Head of Product - stressed on Monday that Jawbone protected its intellectual property through a series of confidentiality agreements promising that they wouldn't keep any company data in their possession, nor reveal it to outsiders.

Those non-disclosure agreements, as is often the case, weren't enough to outright stop the employees from the alleged theft. While Jawbone may not be a company anymore, the fact that these charges, including the one against Mogal, are against individuals, not the company, gives credence to the trade secret theft claims and suggest further repercussions could be in store for all involved.

Tags:  IP theft

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