For many of us, New Year's resolutions typically involve various forms of self-improvement, such as dieting or getting to the gym. Just as individuals adopt personal New Year's resolutions, it is important for companies and business to set goals that improve their competitive fitness in the upcoming year. One way to improve a company's well-being is to ensure that its intellectual property assets are being protected, maintained, and properly leveraged. Since intellectual property is not tangible, it can be overlooked particularly by companies that focus on physical and tangible assets. As we begin the New Year and many of us commit to improving our fitness, we will take a look at two ubiquitous names in the fitness industry, TRX and Peloton, to see how each company's approach to intellectual property has shaped their business.
TRX straps, which are made by Fitness Anywhere LLC, are found in most well-stocked gyms and are a versatile yet simple piece of equipment that enables effective, low impact workouts through a variety of configurations. Although TRX straps appear to be relatively simple technology, consisting mostly of a canvas strap with an adjustment feature, a handle, and a wall mount, Fitness Anywhere LLC obtained broad patent protection for an "adjustable, inelastic exercise device" including an elongated member and anchor in U.S. Patent 7,044,896. Fitness Anywhere LLC then enforced this patent against Woss Enterprises ("Woss"), alleging that Woss offered a variety of infringing products. Fitness Anywhere LLC apparently understood the value of a well-rounded IP portfolio, and had also secured a trademark for the term "SUSPENSION TRAINING," which Woss also allegedly used in connection with sales of its products. TRX largely succeeded in this lawsuit and secured a multi-million dollar judgment against Woss for both patent and trademark infringement. While the damages in this particular case are not as exorbitant as some other recent IP verdicts, this dispute serves as an important example of how companies should leverage multiple forms of intellectual property, including patents and trademarks, when trying to establish a competitive advantage. This verdict also pales in comparison to some of the alleged damages in cases involving another fitness behemoth — Peloton.
Peloton's core business was originally based on offering high-end stationary bicycles (now starting at $2,245) equipped with monitors that are configured to stream cutting edge workouts. Recently, Peloton expanded its digital footprint and started offering a subscription-based workout app. Peloton's rapid expansion has inflicted various forms of intellectual property related growing pains on multiple fronts. On the offensive side, Peloton has been trying to force alleged imitators back to the sidelines by enforcing patents against Flywheel, including U.S. Patents 9,174,085 and 9,233,276 which are directed to the leaderboard feature which is a signature element and essential component of a Peloton workout. Peloton alleged in 2018 and 2019 that Flywheel copied one of its key features that allows users in remote locations to compare their relative efforts during a workout session. Flywheel, which is a well-funded fitness heavyweight itself, responded to the lawsuit by challenging the validity of Peloton's patent at the Patent Trial and Appeal Board (PTAB). The impacts of these types of lawsuits cannot be understated. Reports surfaced in August 2019 that Flywheel was closing a quarter of its studios, which some analysts speculated was due to the stakes in this lawsuit. This situation also serves as a reminder that there are non-litigation options, such as inter partes review, available to defendants in patent infringement disputes. Before this battle could be fully litigated, Peloton recently announced on February 4, 2020 that a settlement had been reached in the patent infringement suit against Flywheel. The exact terms of the settlement are unknown, but Flywheel agreed to stop using the leaderboard feature and also agreed to withdraw its validity challenges at the PTAB.
Peloton's intellectual property adventures have not been limited to patents. In the copyright realm, Peloton has been on the defensive in a 2019 copyright infringement lawsuit filed by a music publishing entity alleging hundreds of millions of dollars in damages. Peloton's video workouts typically include a high-energy trainer that synchs the intensity of the workout to an upbeat playlist of songs. The music publishing entity alleges that Peloton failed to pay royalties for many of these songs used in these playlists. This case is still pending, but it highlights the shifting nature of the fitness industry, where companies are no longer are focused solely on workout equipment and instead are entering new spaces such as media and content creation.
As we start the New Year, it is important for all companies to remember that intellectual property is a valuable asset, which can be used on the offensive to maintain a competitive advantage over business rivals. Likewise, it is important to also be aware of the intellectual property of others in order to avoid stepping into an unexpected and expensive intellectual property dispute.
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