Jawbone's Former CEO Wants to Dismiss Investor Lawsuit

The startup that succeeded Jawbone, the once-famed Bluetooth headset maker, is asking a California court to dismiss a fraud suit against it.

The startup said that the complaint brought by one of its backers is a collection of false assertions, and that the investor behind the suit is "singularly self-interested." Polymath Holdings, the investment firm that brought the initial case, disputes the claims raised in the filing. Polymath's CEO, Kevin O'Leary, said in a statement that the company "categorically denies the claims made against it" and that it will "vigorously defend" itself against the charges.

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The legal drama surrounding Theranos has been heightened by a turbulent market. VCs are facing declines in their portfolio values and a larger slowdown in the technology sector after years of rapid growth. In such an environment, smoldering disagreements that once might have been overlooked can flare up into serious conflagrations.

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All.health Inc. was created in 2017, around the time Jawbone shut down its consumer business. The company promised to develop cutting-edge products, and meet expectations for production. However, Dubai-based investor Polymath Holdings said in a lawsuit last summer that All.health failed to deliver on its promises. In its response to the suit, All.health said it was victimized by Polymath and one of its leaders.

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Polymath, a Dubai-based investment group, invested in All.health in 2019. All.health makes wearable medical devices that track patients' health and aim to help people with chronic disease. According to Polymath, the rapport between the two sides deteriorated. However, All.health disagrees and believes that the deterioration was due to other factors.

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Polymath has filed a lawsuit against All.health, claiming that the latter did not properly deliver on its promise of wristbands that would help people with illnesses like diabetes. In its response, All.health has credited the rising tensions to a disagreement over intellectual property - specifically, that Polymath managing director Ali Hashemi wanted the startup to transfer its IP to a company he controlled, which All.health refused. All.health has also said that disagreements flared after it made the decision to focus on the US market instead of the United Arab Emirates.

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All.health said it decided to focus on the US partly because Polymath and Hashemi didn't provide it with promised UAE business connections. It also claimed that Hashemi had a conflict of interest because of his leadership role at GluCare Integrated Diabetes Center LLC. GluCare and All.health were partners, but the relationship yielded fewer new patients for All.health than expected, the filing said.

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A representative for Polymath Holdings has denied the claims made by All.health regarding Hashemi's alleged conflict of interest. The spokesperson said that the allegations are meant to distract from the failures of accountability, governance, and transparency at the startup. They added that the purported conflict was raised only after Hashemi voiced his concerns.

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All.health's response in court took particular aim at Hashemi. It said that he had publicly praised the product shortly before filing the lawsuit against the company, and that there was an unrelated case from 2014 in which a three-judge appellate panel in the United Arab Emirates said that Hashemi had misrepresented his intentions when asking for information about a startup. In a court transcript, the judge said that Hashemi had received information about the company by saying he was acting on behalf of a wealthy family, but was actually acting on his own behalf.

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In an interesting turn of events, All.health's filing also said that GluCare took the names of All.health staffers off of a scientific paper written jointly by the two companies. After relations had soured, GluCare submitted the paper to the journal Diabetes Management without crediting the All.health staffers or mentioning All.health. The paper was published in late 2021. In its court filing, All.health called the removal of the names unethical and a "blatant attempt to retaliate."

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A spokesperson for Polymath stated that GluCare had removed the names due to the belief that All.health's contribution to the article was minimal.
All.health, founded by former Jawbone Chief Executive Officer Hosain Rahman, has raised significant sums of money - at least $65 million according to a document from 2019. According to its filing, Salesforce Inc. was an early investor in the startup. Other investors include SignalFire, Builders VC and Transformational Healthcare Venture Capital.