October 4, 2018
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Peloton Interactive Inc. (“Peloton”), the company known for its in-home cycling bikes, has filed a lawsuit against Flywheel Sports Inc. (“Flywheel”) in the U.S. District Court in Marshall, Texas. Peloton alleges that Flywheel’s newly released FLY Anywhere bike infringes two patents awarded to Peloton’s co-founder and chief executive John Foley.
Peloton’s in-home cycling bikes use technology to display live and archived cycling classes, allowing users to participate in spin classes that mimic the studio experience. The technology also tracks rider performance and compares performance around the world. Peloton alleges that Flywheel’s FLY Anywhere bike uses the same technology to achieve similar goals, namely, providing an on-demand in-home cycling experience that replicates studio classes.
The lawsuit includes a mention of Michael Milken, the financier who famously pleaded guilty to violating securities laws in 1990 (though Mr. Milken is not named as a defendant). According to Peloton, Mr. Milken is one of Flywheel’s largest investors. The claim alleges that he attended a private investment conference for high-net-worth investors three months before Flywheel announced the development of the Fly Anywhere bike. At the conference, Mr. Milken allegedly falsely presented himself to Mr. Foley as a potential investor in Peloton and “pressed for – and obtained – information from Mr. Foley about Peloton’s technology and business strategy – all without ever disclosing his existing multi-million-dollar investment in Flywheel”. It is alleged that Mr. Milken then passed this information on to Flywheel.
The dispute between Peloton and Flywheel illustrates how technology is intensifying competition in the fitness industry. Whether or not Peloton will succeed in forcing Flywheel to cease selling the FLY Anywhere bike remains to be seen.
Author: Steve Inglis