Peloton and Flywheel: From Potential Partners To Rivals

On February 19, exercise equipment company Flywheel emailed customers to inform them that it was shutting down its at-home virtual bike service in March due to a lawsuit settlement agreement. Flywheel admitted it copied certain elements of Peloton’s bike and consequently agreed to shut down its platform and at-home bike service. Some Flywheel customers will be able to trade their bike in for a free Peloton bike but will have to pay to utilize Peloton classes.

In September 2018, Peloton filed a complaint against Flywheel Sports, accusing them of infringing Peloton’s patents for its stationary at-home bike with built-in studio classes. Peloton also accused Flywheel of corporate espionage and stealing its intellectual property. Peloton alleged that a Flywheel investor was able to obtain information by pretending to be a prospective investor in Peloton to Peloton CEO John Foley. A few months later, Flywheel launched its own version. Peloton believed that the on-demand and live class structure, workout metrics, as well as the leaderboard feature, infringed on its patents. Further, in “[e]arly in 2012, Peloton had discussions with Defendant Flywheel about a potential partnership. The proposal was that Peloton would become the interactive arm of Flywheel to develop the at-home cycling business using Flywheel’s instructor-led, studio class content, and Flywheel would focus on its existing studio cycling business. Flywheel was initially interested, but eventually the deal fell through.”

Both parties filed a motion to dismiss the case, after reaching a settlement, which was granted. Flywheel admits “that Flywheel copied elements of the Peloton bike in developing its Fly Anywhere bike.” As part of the settlement, Flywheel will stop infringing on Peloton’s patents within 60 days. Flywheel will continue its in-person studio classes.

“We’re very excited to have registered a massive win in our fight to protect Peloton’s intellectual property. This result reinforces the strength of our patent portfolio and reaffirms our lead as an innovation company operating at the intersection of fitness, technology and content,” Hisao Kushi, Chief Legal Officer and Co-Founder of Peloton, said in response to the settlement.

Peloton is represented by Hueston Hennigan, as well as Gillam & Smith. Flywheel is represented by Patterson Belknap Webb & Tyler, McKool Smith, as well as The Dacus Firm. The suit was filed in the Texas Eastern District Court.