The medical device company born out of one-time startup darling Jawbone is embroiled in a legal fight.
(Bloomberg) — The startup successor to Jawbone, the once-famed Bluetooth headset maker, is asking a California court to dismiss a fraud suit against it. The complaint brought by one of its backers is a collection of false assertions, the startup said, characterizing the investor behind the suit as “singularly self-interested.”
Polymath Holdings, the investment firm that brought the initial case, disputes the claims raised in the filing.
The legal drama 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.
The startup, All.health Inc., was created around the time Jawbone shut down its consumer business in 2017, and stopped selling the headsets and stereos that made it a cultural touchstone earlier in the decade. Dubai-based investor Polymath Holdings said in a lawsuit last summer that All.health overpromised and under-delivered on its technology and production capacity. In its response to the suit, All.health said it developed cutting-edge products, met expectations for production and was itself victimized by Polymath and one of its leaders.
Polymath, a Dubai-based investment group, invested in All.health starting in 2019. The company makes wearable medical devices, which track patients’ health and aim to help people with chronic disease. Both parties agree that the rapport between the two sides deteriorated — but they diverge on the reason.
Polymath claimed in its suit that All.health did not properly deliver promised wristbands, meant to help people with illnesses like diabetes. In its response, All.health credits the rising tensions to a disagreement over intellectual property — and said that Polymath managing director Ali Hashemi wanted the startup to transfer its IP to a company he controlled, which it refused. All.health also said disagreements flared after it made a decision to focus on the US market, instead of the United Arab Emirates.
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.
A representative for Polymath Holdings denied the claims made by All.health and said that Hashemi was not conflicted by outside interests or his role at GluCare. “Allegations of a conflict pertaining to other investments by Polymath Holdings are meant to distract from the failures of accountability, governance, and transparency” at the startup, the spokesperson said. “The purported conflict was raised by All.health only after Mr. Hashemi voiced these concerns.”
All.health’s response in court took particular aim at Hashemi. It said he publicly praised the product shortly before he filed the lawsuit against the company complaining about the technology. And it cited an unrelated 2014 case in which a three-judge appellate panel in the United Arab Emirates said Hashemi misrepresented his intentions when he asked for information about a startup. In a court transcript, a judge said Hashemi received information about the company by saying he was acting on behalf of a wealthy family, but was actually acting on his own behalf.
In a peculiar twist, 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 “bald attempt to retaliate.”
A spokesperson for Polymath said that GluCare had removed the names because it “believed [All.health’s] contribution to the article was negligible.”
Run by for former Jawbone Chief Executive Officer Hosain Rahman, All.health 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.
The filing wasn’t immediately available on the court’s electronic docket. The case is Polymath Holdings v All Health Inc., CGC22600970, California Superior Court, San Francisco.
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