The stationary bike. A staple in any gym, fitness center or home. While the machine may seem like a standard piece of technology that has been the same since inception, any innovator knows there is always room for improvement.
In a recent suit, Peloton claims to have acted on innovation to disrupt the usage of the stationary bike from a simple workout device, to an at-home, immersive, competitive and community based workout system.
Peloton’s model comprises users having the ability to access daily live classes via a screen on the bike to compete, interact and change the landscape by which they ride. This is experience is fueled by Peloton’s data driven media-technology logistics. Essentially, "PTON" aims to control each user's experience by continuously adapting it by virtue of fostering personal connections between user and on-screen instructor, queuing users to send virtual "high-fives" to each other upon completion of a rigorous workout bit, pushing individuals to challenge virtual "leaderboards," down to manipulating music and volume level dependent on a workout’s level of difficulty.
These features, paired with their trade secrets in marketing, sales and programs have allowed the company to achieve the status of a publicly traded company and a market cap that hovers around $8 billion.
As competitors emerged, Peloton took notice of one in particular, Flywheel Sports. Flywheel produces a subjectively similar product, the “FLY Anywhere” bike. The Anywhere bike utilizes live streaming or on-demand classes, tracking a rider's performance via metrics, comparisons of rider performance to competitors and fostering an online community driven workout system.
In efforts to thwart the competitor, Peloton filed a request for jury trail wherein Peloton claims to have discovered, just months before FLY Anywhere's release, PTON’s CEO, John Foley attended a J.P. Morgan event in order to present the company to potential investors. Allegedly, one investor, Michael Milken, personally probed Foley on future business plans, market retention, and even Peloton's intellectual property. Foley claims to have then found out one month after the event that Milken was one of Flywheel's largest investors. Thus, on information and belief, Peloton claims that Milken's purpose in probing Foley was to acquire information that could help Flywheel and subsequently, the request charges Flywheel with counts of patent infringement.
Fortunately for Peloton, the choice was made to protect themselves against unfair competition through intellectual property, and more specifically, via well written patents. Details on Peloton’s patents can be found in in U.S. Patent 9,174,085, U.S. Patent 9,233,276, U.S. Patent 9,861,855 and U.S. Patent 10,322,315.
The result was the suit ending in a settlement agreement. Flywheel Sports not only admitted that they infringed on Peloton's patents, but also admitted to having copied elements of the Peloton bike in developing their own bike.
As such, Flywheel has agreed to not only discontinue the service provided by the FLY Anywhere bikes, but also discontinue selling the product. As a result, current owners will be able to trade-in their FLY Anywhere bikes for a refurbished Peloton bike, at the cost of Flywheel Sports.