In last week’s column, I took a look at Peloton’s successes and struggles to date in terms of enforcing its own patents. But that of course is only half the picture when talking about a company’s IP experience. An analysis of how the company has handled IP disputes from the defense side is also important — especially for a unicorn like Peloton, where a company’s meteoric financial success also serves to make the company a compelling target for royalty-seeking patent holders. Add in the fact that Peloton is a relatively new entrant into the mature industry of stationary bikes — albeit one with a premium product, image, and cultish following — and the fact that Peloton has already found itself the target of a host of patent infringement suits should come as no surprise.
In fact, it did not take long for Peloton to get sued by a competitor. After at least one failed attempt in 2014 by Peloton to license the patent portfolio of its competitor Icon (maker of the NordicTrack and other branded home fitness equipment), Icon decided to sue Peloton on some of its patents in 2016. In response, Peloton moved to transfer the case to its home forum of the Southern District of New York — in case we needed another reminder of the importance of venue in patent cases — before ultimately settling post-mediation in early 2018. Not a bad result for the company’s first foray into patent defense.
But that first bout with Icon was just the beginning. Since then, Icon has sued Peloton for patent infringement no less than three times. First, Icon counterclaimed for patent infringement in a 2020 Delaware action regarding each side’s treadmill products. Yes, Peloton initiated that lawsuit, but it probably also must have anticipated that Icon would respond in kind — highlighting one of the challenges for a company like Peloton looking to establish the value of its patent portfolio. Namely, that the targets can bite back. Later in 2020, Icon filed a patent infringement case targeting Peloton’s updated stationary bike, the Bike+ — leading to Peloton filing an IPR against the asserted patent. And just a few weeks ago, Icon filed yet another patent infringement case against Peloton, this time regarding the “Auto Follow” feature, where the instructor’s voice instructions lead to automatic adjustment of the bike’s resistance. (For some reason, I imagine a dog-sled driver yelling out “mush” when I think of this technological wizardry.) In short, Icon and Peloton are treating each other like a couple that agreed to split up a few years ago, only to get back together just so they can keep fighting.
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That said, the continued hostilities between Icon and Peloton do illustrate the punch-counterpunch nature of IP disputes between committed rivals. It is obviously important to both companies that each respects the other’s patent portfolios, as they compete to develop innovative enhancements to household/fitness center staples like stationary bikes and treadmills. Sure, they compete on price, branding, and the like. But emotions tend to run hot when a cool new feature is quickly incorporated by a competitor into its own offerings. For Peloton, the challenge with Icon is to try and get to at least a cross-license, or at least to reprise whatever led to the first settlement between the parties. Fending off attempts by Icon to get a preliminary injunction, which Peloton was able to do in one of the filed cases, can go a long way toward getting to detente. But even as chasing settlement often makes solid business sense, Peloton will also want to make sure that it continues to send a message that it is not afraid of full-scale patent litigation.
Sending such a message is important because Icon is only one example of a patent holder choosing to sue Peloton in the past year. While the main threat to Peloton long-term may come from a dogged competitor like Icon, Peloton has also been set upon by teeth-baring patent asserters of different breeds. As one example, Peloton was recently sued for patent infringement by Madd Dogg Athletics, best known as the owners of the “Spinning” trademark in the exercise context. In response, Peloton has quickly filed an Alice motion against the asserted Madd Dogg patent claims, while also challenging Madd Dogg’s trademark in a separate proceeding. In short, Peloton has no qualms about upping the stakes against even the most rabid patent owner seeking a share of Peloton’s revenues.
But the threat to Peloton is not restricted to companies in the exercise arena. The most recent patent infringement case — filed just a few weeks ago — against the company was actually filed by Sling TV-maker Dish Technologies, owner of streaming media patents. Dish is asserting those patents against Peloton, arguing that the true value driver of Peloton’s brand is the streaming video technology incorporated into the Peloton exercise equipment, which allows for streaming of instructor-led classes to Peloton purchasers. We will see if this move by Dish will inspire other patent holders with patents that can be read on different aspects of Peloton’s products and services to file suit. But Dish’s filing already proves that Peloton’s patent “exposure” is not limited to patents directed solely to exercise equipment per se.
Ultimately, it is fair to say that we are still in the earliest chapters of Peloton’s patent defense story. At the same time, we can already see that Peloton has adopted an “active defense” approach to dealing with patent infringement assertions against it. Whether it is a motion to transfer, an IPR, an Alice motion, or even targeting IP owned by the plaintiff — Peloton will do everything it can, as early in the process as it can do it, to get itself on level ground for the fight ahead. Because Peloton understands that even the tallest peak can be conquered by a determined rider pedaling uphill one stroke at a time. And just like attack mode works for scaling hills, it can also work for fending off patent lawsuits.
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Please feel free to send comments or questions to me at [email protected] or via Twitter: @gkroub. Any topic suggestions or thoughts are most welcome.
Gaston Kroub lives in Brooklyn and is a founding partner of Kroub, Silbersher & Kolmykov PLLC, an intellectual property litigation boutique, and Markman Advisors LLC, a leading consultancy on patent issues for the investment community. Gaston’s practice focuses on intellectual property litigation and related counseling, with a strong focus on patent matters. You can reach him at [email protected] or follow him on Twitter: @gkroub.