Fitbit sues counterfeiters who diverted defective products

Wearable tech firm Fitbit is suing alleged counterfeiters for selling fake and dodgy versions of its activity trackers on e-commerce sites including eBay and Groupon.

The suits against Laguna 2, Joel Blank (managing partner of Laguna 2), and up to 30 other unnamed counterfeiters, cite trademark infringement, brand dilution and counterfeiting, with Fitbit claiming unfair competition.

According to the lawsuit, Fitbit's supply chain was intercepted by the counterfeiters, who diverted products that were designated to be scrapped or recycled because they did not meet Fitbit's "high quality standards" as a result of defects or other quality issues.

The tech firm, who sells the majority of its products directly to consumers, says the products were never supposed to be resold yet the products were packaged in counterfeit packaging and sold through several unauthorised online stores "under the guise that they were 'refurbished' genuine Fitbit products". The packaged fakes also included a warranty card yet no warranty was provided by Fitbit for these products, further misleading consumers, the company said.

According to the lawsuit, Fitbit discovered the defendants using the brand name and trademarks on consumer electronics website www.thenextweb.com. The counterfeiters were given the opportunity to "change their ways" but refused and even expanded the illicit business to "more established distribution channels", including eBay and Groupon.

The tech firm believes more than 200,000 fake Fitbit products were sold on Groupon over the past two years, worth a value of more than $20m, while fake products worth in excess of $80,000 were sold on eBay.

Thousands of the products have been returned to the defendants by customers after having purchased them from Groupon, the lawsuit claims, adding that the defendants have refused to allow Fitbit to inspect the products.

"Fitbit products and services have a reputation with consumers for being high quality, innovative and reliable… Fitbit expends substantial resources on quality control in its supply chain," the suit said. "Defendants' unlawful conduct has not only caused Fitbit significant monetary damages, but it also seeks to seriously undermine the established reputation for quality and reliable products and services that Fitbit has worked so hard to achieve."

The lawsuit adds that customers purchasing the fakes from the defendants have been "sorely disappointed and confused" and have left "scathing reviews" of the products.

One review, cited in the filing, said: "If I could give this product zero stars I would. I've had the Fitbit flex for less than six months and it no longer tracks any steps. It is fully charged although charging it is a hassle as I have to put a rubber band around the charger and the battery in order for the connectors to connect."

The tech firm said: "Fitbit not only lost the opportunity to sell authorised, high quality products to hundreds of thousands of consumers, but also has taken a significant and ongoing hit to its reputation, brand and goodwill with members of the consuming public."

Fitbit seeks a permanent injunction to end the "unlawful and infringing conduct" along with the complete destruction of all products, as well as recovering full damages for the harm caused.