War of the bike makers?

Triathlon Forum
1

Interesting article from today’s San Jose Mercury News. I got a close look at the Volagi bike at a local bike expo and other than the sloping top tube, I am not sure what IP they are allegedly infringing? Seems like their big selling point is the fact it is disc brake equiped. I happen to have a Roubaix and love it but it would be nice to see a small producer continue to innovate.

Any insiders out there have any details on this case?

War of the road bikes
By Howard Mintz

Robert Choi, left, and Barley Forsman say that their Volagi Liscio bike… When Robert Choi and Barley Forsman quit their jobs in Morgan Hill nearly two years ago at one of the nation’s largest high-end bicycle makers, they were pursuing a Silicon Valley-style dream. They wanted to develop their own slick, high-performance bike in a company they dubbed Volagi, Latin for “a will to go.”

The two buddies and cycling enthusiasts established their company and designed a bike that sells for as much as $4,500 a pop.

But their former bosses want to take the air out of their tires. They’ve sued Choi and Forsman in a case set for trial this week in Santa Clara County Superior Court, where a jury will be asked to settle a bitter legal feud that has all the makings of a David vs. Goliath standoff.

Jury selection is set to begin Tuesday, and the trial is expected to unfold over the next two weeks.

Specialized Bicycle Components, one of the nation’s most prolific and well-known makers of high-performance bikes, filed the lawsuit last year, alleging that Choi and Forsman stole the design for their bike before leaving the South County-based company in 2010. They say Volagi and its signature bike, the “Liscio,” is based on Specialized’s trade secrets.

Choi and Forsman deny stealing any designs from Specialized, maintaining that their former employer is simply bitter because the pair have developed a unique product that’s drawing raves in the biking world. The partners view the lawsuit as an attempt by a powerful

company and its well-paid lawyers to wipe out a small competitor.

“They were embarrassed,” said Forsman, 41. “A lot of this came down to appearance.”

Added Choi, 50: “We thought we had a better idea. And in order for us to pursue it, we were going to have to quit Specialized. For them to pursue this is an incredible surprise.”

Specialized’s lawyers could not be reached for comment Monday. However, in court papers they depict Choi and Forsman as “two former employees who stole (the company’s) trade secrets and started their own competing company during their employment with Specialized.”

Specialized alleges in court documents that Choi and Forsman schemed to design a bike to rival their line of “Roubaix” bikes, which can sell for as much as $11,000 and is described as one of the company’s “most significant sources of revenue.”

Mike Sinyard, Specialized’s CEO and founder, said in a deposition that when he visited Volagi’s website after hearing about it from a Las Vegas trade show, he recalled, “There was our bike.”

The jury will have to sort out the competing accounts between Specialized, founded in Morgan Hill in the mid-1970s and now a company that sells hundreds of thousands of bikes each year, and Cotati-based Volagi, which to date has sold about 175 bikes, according to its founders.

Thus far, judges have rejected Specialized’s attempts to shut down Volagi’s sales of its bikes, but the company plans to ask a jury to order the firm to pay “substantial” damages and relinquish the patents to its bike designs.

But Forsman and Choi say their bike does not resemble anything Specialized produces, and is in fact designed to fill a void in the cycling world for people who aren’t professional racers. They are convinced Specialized figured the partners would just pedal away when they got sued.

“We did it above board,” Choi said. “We thought it was the American way for us to quit the company and go on our way. They just didn’t like that we had a successful bike, perhaps. And they thought we would just cave.”

Contact Howard Mintz at 408-286-0236. Follow him at Twitter.com/hmintz.

2

A bike that looks similar to another bike…that’s preposterous! Gotta love big-business and lawyers.

3

David vs Goliath indeed
I for one dislike actions like this from big companies trying to wipe out smaller competition through litigation, as a consumer, I’m going to boycott all things Specialized
.

4

So they left Specialized, designed a bike, and now Specialized is suing them for stealing their ideas. I wonder if their bike looks like, or incorporates any of Specialized patents/intellectual property. I’m not that up-to-speed on Specialized’s designs:

http://i.imgur.com/pyW9bl.jpg

5

x2. Specialized can “lawyer” these guys to death.

Brad

6

“We thought we had a better idea. And in order for us to pursue it, we were going to have to quit Specialized. For them to pursue this is an incredible surprise.”

So they had an idea while they worked for another company for a new design for a bike and didn’t take it to the company they currently worked for? I would likely sue them as well. I suppose this happens all the time but they shouldn’t have admitted they came up with the idea while working for another company. What are the odds they used Specialized owned equipment (autoCAD, computer, drafting equipment) to discuss this new idea?

7

Unfortunately we will probably never know what really happened. More than likely it sounds like the departed employees were miffed that their design wasn’t picked up for production inside Specialized while they were employed there. They leave the company thinking they can make the bike themselves. Unfortunately, since they designed the bike on Specialized’s dime, it is Specialized’s bike, not theirs.

Hopefully this is not the case and they kept this design for themselves while they were working.

8

Unfortunately we will probably never know what really happened. More than likely it sounds like the departed employees were miffed that their design wasn’t picked up for production inside Specialized while they were employed there. They leave the company thinking they can make the bike themselves. Unfortunately, since they designed the bike on Specialized’s dime, it is Specialized’s bike, not theirs.

Hopefully this is not the case and they kept this design for themselves while they were working.

How do you make the conclusion that they designed the bike on Specialized’s dime?

9

http://i.imgur.com/pyW9bl.jpg

http://1.bp.blogspot.com/-aIPInf6aOo4/Tf0EVL-51yI/AAAAAAABxLs/SHVDe2WNvF0/s1600/mcLaren%2Bvenge06.jpg
.

10

Like I said, I’m assuming that is what is going to be the result of the lawsuit. If they were trying to develop this frameset while working at Specialized, on Specialized computers, while on the clock at Specialized, then it will be determined Specialized IP.

I hope they did all this on personal computers, away from the office, but I’m betting it is a failed proposed frame they pitched to have put into production so they wanted to leave with what they felt was their design and start a new company. While I wish they could do this because it looks like a great bike, Specialized is not going to let them.

Simply my reaction when reading the article and the responses of both parties.

11

I agree that it is impossible to speculate without knowing the full details of the case. I think the story does however highlight the position the industry in respect to design and technological advancements in respect to materials and manufacturing processes.

The bicycle has become a highly specialised piece of design and to keep ahead in the field needs constant research and development. The truth is there are very few groups who are capable of this sort of investment due to the price point of the end product and so we are inevitably seeing a few big players in the market. Following in their development trail is a host of smaller companies using the same technology and manufacturing processes. One very good example being carbon wheels how many of these are coming out as oiginal product and how many are follow on product using previous moulds but simply re badged in a competitive market?

The point I want to add is, do the people at the leading edge of design in the industry feel they are being given the resources and personal rewards to keep them loyal to the main players. This case highlights possibly not! If not is it a realistic expectation for the industry to reward its top designers and engineers well compared to othe similar industries. In other words do I get paid the same salary as a specialist carbon fibre design engineer working at Specialized on their Venge as I would do at McLaren on their carbon fibre structures at the heart of their latest sports cars costing 20 times as much as the bike example?

There was a time that people in the industry came from within the ranks of the cycling comunity and built their own brands as entrapeneurs. Today are we not simply seeing the bike advance so much that this route is not sufficient rather recruitment has to come from a pool of talent which has a specialist skills set that can traverse a number of industry sectors let alone across brands. If this is the case then i think we are going to see more and more of this type of case untill the industry simply tightens up contracts to the same levels of other industries at which point this case would be clear cut one party being significantly in the wrong.

It is also the case that cyclings super brands know they are playing a game of taking developments from other industries such as motorsport simply because their own development budgets are not large enough to make significant leaps forwards in materials technology for example. This works for a time if the developments are significant steps forwards. If we are now entering a period of diminishing returns then the follow on market quickly catches up and it becomes feasable to leave a company and get another manufacturing plant in the Far East to knock up the design as this case shows. If Specialized had moved things on a long way I am not to sure they would be too bothered about a similar bike being on the market. The fact they have not means rather than protect their market lead through research and development they are doing so through the courts.

12

Msquiggle pointed out what seems to be the operative sentence above:

“We thought we had a better idea. And in order for us to pursue it, we were going to have to quit Specialized. For them to pursue this is an incredible surprise.”

The order is important: they had the idea while at the firm, then they left. I’m sure we have some experts on the work-product doctrine on the board but it sounds like the idea belongs to Specialized because Specialized were paying them at the time the idea popped into their heads.

13

Haha. I love the last line in the article:

“We did it above board,” Choi said. “We thought it was the American way for us to quit the company and go on our way. They just didn’t like that we had a successful bike, perhaps. And they thought we would just cave.”

Sounds like something their lawyers told them to say; painting Specialized as some vengeful corporation out to squash the American dream.

Who really knows what happened, but from the timeline of the article, it sounds like the people started the company while actually working at Specialized. Presumably if Specialized passed on the design, or whatever happened, then the guys designed the bike while at Specialized, on Specialized’s time, with Specialized’s equipment. If all this is true, Volagi is in the wrong because that amounts to IP theft.

Even if it’s not completely true, but some parts of it are true, Volagi has an uphill battle ahead of them. Often when working in their capacities for companies, you sign waivers giving ownership to any intellectual property that you produce while employed (or, at a minimum, produce during business hours) with the company. So depending on the law, Volagi may have to prove that they didn’t have the idea for the bike while at Specialized or that all the work and creation of the idea for the bike happened on home computers during off-hours.

I’ll be interested to see a follow up to this.

14

OK. As many know I am an IP lawyer with over 25 years in the field. I have been involved in similar issues going all the way back to law school. This is NOT a simple issue. Without the facts you cannot brand Specialized as an ogre trying to squash the little guy and cannot similarly label the two designers as thieves.

A great deal depends on their employment contracts, the scope of their responsibilities, the time line of the bikes development, what resources were used to produce the design, the disclosure (if any) made to Specialized while they were employed there, etc.

In general an engineer or designer’s employment contract will dictate the scope of their employment. If either of them had developed a new for of cat litter while working at Specialized then there would be very little chance that Specialized could win a claim that they owned that concept. Here the product is exactly in Specialized area so that does not help the designers.

If the technology at issue fell with in the scope of the designer’s responsibilities while they worked at Specialized, IF they developed the concept at Specialized facilities using Specialized’s resources then Specialized has a strong case. If not then the case is weak. Bear in mind at my company, if an engineer develops something and we do not file a patent on it or make a product, here in the US the company still owns it.

You cannot simply compare the designer’s bike to Specialized bikes to determine the issues here. If the article is correct this is a trade secret case. This means that the case involves concepts that are not patented, but Specialized CLAIMS as their secret propriety property.

It will be interesting to see what happens, but bear in mind that if this is a Trade Secret case, parts of the trial may never be made public.

15

FYI mthose guys were not bike designers at specialized. So it’s not a case of “specialized passes on the design”

More info here:

http://www.bicycleretailer.com/news/newsDetail/6331.html