Wearable activity tracker Fitbit is being accused by its rival Jawbone of stealing trade secrets, Bloomberg reports.
The two companies have been caught up in legal battles since May 2015, when Jawbone sued Fitbit for stealing employees and critical proprietary information.
The Justice Department and Department of Homeland Security have been conducting a grand jury probe of Fitbit for more than five months, according to Jawbone's Feb. 1 filing in San Francisco state court.
"The evidence developed to date in this litigation confirms a conspiracy by Fitbit and the individual defendants to steal Jawbone's coveted trade secrets and to use them to enhance Fitbit's position in the marketplace, in clear violation of California law," Jawbone said in last week's filing as reported by Bloomberg.
A decade after it was founded by then 22-year-old Sophia Amoruso in 2006, Nasty Gal filed for bankruptcy in November.
"Filing for bankruptcy is actually the most responsible decision for the business," Amoruso said at an event in Sydney, Australia when the news broke, the Independent reported.
The trendy fashion retailer had been through some tumultuous times in recent years. Amoruso stepped down as CEO in 2015. In her absence, the retailer laid off employees and former workers complained of a toxic environment.
After declaring bankruptcy, the retailer announced it would close 154 stores in the US and Canada.
"Back in the day, all of the cool kids had trendy brand names plastered across the front (or back) of their clothing. The trend has changed, and style today, perhaps encouraged by social media, embraces individualism and uniqueness," wrote Nicholas Rossolillo in finance publication The Motley Fool. "Online ordering and heavy discounting have also taken a toll on the industry, especially mall-based retailers. Aeropostale simply hasn't been able to adapt."
Kate Spade's sales have suffered in 2016 as tourists' visits declined and discounting grew more popular, making it harder to sell items at full-price.
"We have become increasingly frustrated by management's inability to achieve profit margins comparable to industry peers," Caerus' founder, Ward Davis, and managing partner, Brian Agnew, wrote.
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Fitbit is trying to get the suit dismissed, claiming that there is no evidence that the files Jawbone says were taken by its ex-employees were ever downloaded to or accessed on Fitbit's systems. There is another hearing set for Feb. 15.
Shares of Fitbit had a rough 2016, tumbling by 75% amid an increasingly competitive market for wearable devices. In November, the company slashed its earnings-per-share guidance for the holiday quarter to just a quarter of what analysts had been expecting.
The company has also suffered a tough start to this year, after reporting fourth-quarter results on January 30 that were well below previous estimates, in addition to slashing its guidance for the vital holiday quarter. FitBit said it sold 6.5 million devices in the fourth quarter, and that revenue would come in at $572 million to $580 million, well below its previous guidance range of $725 million to $750 million.