Tech giant Google has bought a bulk of intellectual property from watchmaker Fossil, pouring fuel on rumours that it is working on a flagship smartwatch product.

Fossil Group announced that it has sold Google a "selection" of intellectual property (IP), related to smartwatch technology it has currently under development.

As part of the US$40m (€35m, £31m) deal, a portion of Fossil Group’s research and development (R&D) team will also transfer to Google.

In 2014, Google released OS Wear by Google – an operating system designed for smartwatches and other wearables – but has so far not produced wearable hardware.

According to Stacey Burr, president of product management for Google's Wear OS operations, the transaction "showcases Fossil and Google’s shared investment in the wearables industry".

“Wearables, built for wellness, simplicity, personalization and helpfulness, have the opportunity to improve lives by bringing users the information and insights they need quickly, at a glance," she said.

"The addition of Fossil Group’s technology and team to Google demonstrates our commitment to the wearables industry by enabling a diverse portfolio of smartwatches and supporting the ever-evolving needs of the vitality-seeking, on-the-go consumer.

In recent years, smartwatches have become Fossil Group’s fastest growing category.

The company has developed and launched smartwatches across 14 of its owned and licensed brands.