While the use of pedometers goes back centuries, the story of the modern fitness technology industry begins in 1965 with Yamax’s “10,000 steps a day” pedometer. Then in 1982, Polar Sport released the Tester PE2000, the first wireless chest-strap heart rate monitor. In 1999, Casio released the first GPS watch, though GPS technology did not become practical for civilian consumers till President Clinton’s 2000 order instructing the military to stop scrambling GPS signals. Garmin’s flagship exercise-monitoring watch, the Forerunner, followed a few years later. Today, the fitness industry is worth approximately $244 billion. This article examines the litigation trends of the biggest players in this scene since 2019.
Intellectual Property Suits
Like the video game industry, Intellectual Property (IP) suits make up a majority of the industry’s litigation. Of the 245 cases included in these analyses, 132, 53%, concern intellectual property. Of those IP cases, 95% concern patents. While there is variance in the exact proportion of the companies’ caseload that concern IP, these differences are not significant. Additionally, the industry as a whole deals with the same proportion of IP suits as the video game industry; though a significantly greater proportion of patent litigation than the video game industry.
The bulk of the patent suits concern various bits of technology that allow fitness wearables and smart home exercise equipment to function. Peloton in particular has both brought and faced numerous suits over the software behind online spin classes. Both Peloton and their opponents claim to be the true innovator in at-home exercise and that the other party is profiting off their hard work. Peloton has also sparred with iFit over a patent to add a weight rack to a stationary bike and with Johnson Health Technology over “smart” treadmills.
Garmin’s patent suits center around their smart watches. These suits cover technology to sense movement, to remotely monitor the user’s diagnostic data, to a remote server, and technology to immediately upload media via bluetooth connection to an internet connected device. Fitbit has faced a similar quantity and type of IP litigation.
Peloton and Wage Theft
Peloton is the only fitness tech company to have faced allegations of wage theft in recent years. Plaintiffs, workers who install Peloton bikes and treadmills in customers’ homes, claim that the company did not pay them overtime and/or did not provide meal and rest breaks as required by the Fair Labor Standards Act. Of the five such suits, one has been settled and the others are ongoing.
Securities Suits
Only two companies have faced securities litigation since 2019: Fitbit and Peloton. Fitbit faced nine suits over their 2021 acquisition by google. These suits followed a similar formula to those previously covered by Law Street; stockholders filed suit alleging the company did not make adequate disclosures surrounding the acquisition, then subsequently voluntarily dismissed their suit, potentially after receiving a mootness fee.
Peloton has faced two different sets of securities suits over various product recalls. In March 2021, Peloton informed customers that a child had been killed in a “tragic incident” with a Peloton Tread+. The company then faced seven different suits alleging damages from the treadmill and a $19 million fine from the Consumer Product Safety Commission. Following Peloton’s May 2021 recall of the treadmills, dozens of plaintiffs filed suit, alleging the company misled investors about this issue and how it might affect the company’s profits. The litigation is ongoing.
Peloton also faced two suits, one product liability and one securities, over a recall of a defective seatpost on their flagship stationary bike.
Cases by Outcome
Across all these companies, the most common outcome, 28%, is an out-of-court settlement. However, this is likely an undercount as not all settlements appear in court documents, and a vanishingly small proportion of those list the terms of said settlement. The top fitness tech companies only had a judge issue a final ruling against them in 8.1% of cases.
Win Rates
Definitions and Caveats
To compare how often these companies win their cases, all the disparate outcomes need to be simplified into the company winning a case, tying a case, or losing a case. Thus, for the purposes of the following analyses, “winning” a case is defined as when a judge rules in the company’s favor or when the plaintiff bringing a case against them voluntarily dismisses their suit. A “tie” is defined as a settlement or when a judge delivers a mixed ruling. A “loss” is defined as when a judge rules against the company or when a company voluntarily dismisses its own suit. Cases that are ongoing, transferred to another district, or remanded to a state court were excluded.
However, this discretization does not account for how much paying out a settlement affects the company’s business, or cases in which the company achieved their goal outside of the suit and subsequently dismissed its case.
Win Rate by Company
No company won a significantly greater proportion of their case except one, Garmin. Assuming these trends hold, the other companies will continue to “tie” between 40% and 50% of their cases whereas Garmin will “win” 71% of their cases. The reasons behind this discrepancy will remain the subject of future examination.
Win Rate by Case Type
There are far too many various case types to simply examine how often fitness tech companies win each one. As such, for the purposes of these analyses, the federal Nature of Suit codes were collated into larger categories. Patent cases cover those with the Nature of Suit Code 830 Patent or cases heard before the Patent Trial and Appeal Board. Copyright/Trademark cases bear the NOS codes 820 Copyright or 840 Trademark. Securities cases cover those with the NOS codes 850 Securities, Commodities, Exchange or 160 Stockholders Suits. Americans with Disabilities Act cases are those under the NOS code 446 Civil Rights – Americans with Disabilities Act – Other, which are overwhelmingly blind or visually impaired individuals filing suit alleging that these companies’ websites are not sufficiently accessible to them. Labor cases include those with the NOS codes 790 Labor – Other, 442 Civil Rights – Jobs, and 710 Labor – Fair Labor Standards Act. Policy/Procedural cases contain those with the NOS codes 899 Administrative Procedure Act and 899 Other Statutes APA/Review Agency, as well as In re: Nimitz Technologies LLC, a patent dispute in which Garmin filed an amicus brief specifically arguing against Nimitz’ lack of disclosure as a plaintiff and not commenting on the larger alleged patent infringement. Cases in which the plaintiff alleges damages because of a product or that the product was not fit for purpose or as advertised are labeled “Product Issue.” And disputes over contracts are categorized as “Contract.”
On average, companies did not win any type of cases more than the others, excepting Copyright/Trademark, Labor, and Securities suits. The fitness tech companies won Copyright/Trademark and Labor cases more than other case types, and they won Securities suits even more often than those two. The win rates for Copyright/Trademark cases and Labor cases did not significantly differ.
