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Specialized Wins Lawsuit, Volagi Wins Freedom

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The Specialized v. Volagi Cycles case has closed. In the end, Specialized won a reduced claim of “breach of contract” against Volagi co-founder Robert Choi and was awarded one dollar. The “theft of IP” charges were dropped.

Volagi’s other co-founder, Barley Forsman, was found not guilty.

Tweets and reports floating around peg the cost of the trial at $440,000 for Volagi and $1.5 million for Specialized. Another small victory for Specialized: Volagi will have to pay its own court costs…for now.

While the court of public opinion has been fairly vocal on this case, in the end it was about technicalities that only the parties involved could truly know. Specialized founder Mike Sinyard issued this statement:

“This lawsuit was a matter of principle and about protecting our culture of trust and innovation. We respect the ruling of the court in our favour. We are very satisfied with the outcome and the damages set at $1.00. We really want to put all our passion and time into growing the sport of cycling.”

For Volagi’s part, both founders and their co-workers say they’re incredibly relieved the ordeal is over. They will not have to change their bikes, designs or patents.

Choi told us: “We fought one of the largest cycling companies in the world with some of the best lawyers in the country and won. It was hurtful to think Specialized or anyone would think that we stole the idea for our bike. We worked really hard to develop it, and to be told did something wrong in the process really hurt. We think justice was served. I want to tell the cycling world to breathe a sigh of relief, too, because we can still paint bikes red.”

Personally, all of us at Bikerumor are glad it’s over and both companies can get back to focusing on what they do best: Making sweet bikes.

So, what’s next?

Forsman says now they’re likely to go after Specialized for attorney’s fees.

“We’ve been dodging bullets for the last year and a half,” he said. “Everytime we showed up for mediation (we had to) wonder what they’d sue us for that time. I think it’s pretty clear the trial was wrongful.

“Our next step is start filing some paperwork to get our money back. It might take a year or more, but we expect it to happen because we can show plenty of evidence of it being a wrongful suit. Most importantly, we won yesterday. Yesterday is when the judge made the ruling that there were no damages and no wrong doing for Volagi. None of the trade secrets or intellectual property stuff held up. So we came into (Friday) knowing we still had our jobs on Monday.”

FULL DISCLOSURE: One of our writers, Zach Overholt, works for Volagi. He is not involved in this case nor did he contribute to this post.

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56 Comments
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Steve M
Steve M
11 years ago

Sinyard is “very satisfied with a dollar”. What a prick.

Matt
Matt
11 years ago

@Steve, you have no idea what occured so STF. Maybe winning was the point and not the money. We don’t know and you certainly do not.

Dangerjonny
Dangerjonny
11 years ago

I had respect for specialized as a brand, but that has gone, talk about bullying in the highest degree.
Mike sinyard should look at why he started specialized and why he innovates.
What a douche! Nothing but a corporate sellout. With the shit pay that I know specialized pays it’s designers no wonder they went to do their own thing.

Dan
Dan
11 years ago

I hoped they used that dollar as TP before handing it over

Pedro
Pedro
11 years ago

…seems to me, the fat lady is still singin’!

jason
jason
11 years ago

Why not call him a prick, look at this situation compared to, lets say Trek’s ABP and the DW pivot design, although not quite the same set of circumstances, but a similar result. Two companies came out with an idea that appeared to be the same. Trek could have sued over the issue, but took the stance of, wow look at that someone else came up with as good of an idea as we did, lets both sell some bikes. Specialized is a very innovative company, but they will step on anyone to be as big of a company as they can, and that is why I say call Sinyard a prick.

martini
martini
11 years ago

I’m not in market for a carbon road bike, but if I were, Volgai would have my money, hands down. I do like the concept, but I like the little guy a whole hell of a lot better. I hope they get their attorney’s fees back out of Special Ed.

Steve M
Steve M
11 years ago

Well Matt I am going to let that slide cuz my brothers and sisters are doing a great job of backing me up.

Hey if having Volagi thinks they have their freedom, that 440k hanging over their heads represents over 2500 bucks per bike sold to date. So unless they tack on the 2k for shipping and handling on future sales it might be that Special ed bleeds them to death after all

Scott
Scott
11 years ago

Dang @Matt! Keep cashing those Specialized checks or being a CEO or something. That’s a lot of anger for calling a big guy who tried to stomp a little guy a prick. Maybe you are a professional bully?

Jdog
Jdog
11 years ago

This case will cost SP WAY WAY more that 1.5 million. They just got handed the worst press any company could ask for. Some say any press is good press, this is not good press. No one likes a bully.

sambo
sambo
11 years ago

specialized looks like the creep here but they don’t and won’t care. what they did was to send a message to all current and future specialized employees: we will f0ck you up if you make yourself the competition. they knew they wouldn’t win it all, just some anticompetitive manuvering.

David
David
11 years ago

You may want to double check that you are using the correct legal terminology in your story. “Charges” and “Guilt” are used only in criminal trials. In a civil trial, the plaintiff has “claims” against the defendant. And the verdict doesn’t assign guilt, but rather finds “For the plaintiff” or “For the defense.” …and then someone pays damages…and no one goes to jail…

Dogpatch
Dogpatch
11 years ago

And you know what, Many might just buy a different bike brand this year. I agree, the bigS has lost sight of their customer, the cyclist. Their bad press is costing them millions in lost revenue. In these times, I think many are more likely to purchase from the ‘little guy”. I say more competition from a super sick looking carbon bikes (Or metal-All City/Don Walker) that cost less is good. I say Go Volagi or whoever – many might happily pay 2k at this point for a bike from anyone else.

What does Mike mean “get back to growing the sport”? = Suing other companies, threatening retailers over Amazon, threatening vendors, I don’t think constitutes growing anything. They’ve lost touch, especially at the “regional-Local” level and turned themselves into the Bose’/Lexus of bike companies. Do people buy bike brands because of the retailer customer service? or because of a name?

I’d like to see a survey online of how many people’s opinion of their brand has changed since all this started…how about it BR?
Then the second survey question – how can bigS fix it?

Kovas
Kovas
11 years ago

You know who really won here … all them lawyers.

But hey, I guess somebody’s gotta be able to afford those 18K Specializeds

eric
eric
11 years ago

I agree with Jdog. While the immediate court costs were 1.5M, Specialized may be feeling this for a long time. If not as a company, I’m sure some of there dealers will. Wasn’t there an article about a specialized dealer being confronted by customers about this case?

On the other hand, Volagi, may have more sales because of the increased awareness of their brand. Who knows?

cjeder
11 years ago

@jason: John Castellano has a less rosy view of Trek, during the nineties Trek put him through the ringer over “sweet spot” IRT suspension he licensed to Ibis, Schwinn and Catamount.

DJ
DJ
11 years ago

C’Mon guys, let’s be honest here. We all like to give a shot at the big guys. But on that case, let’s be honest, the bike looks too much like a ROUBAIX.
It is a ROUBAIX with discs. They should go back to and try to do something that at least don’t exist…or something that dosen’t have too much succes and try to look a little bit more genious.
Think volagi don’t look too genious.

Scott
Scott
11 years ago

@kovas AHAHAHAHAHA! Seriously! What does a Specialized lawyer ride? A bike with 6 Di2 kits on it and a fluxx capacitor? I bet one of them has put a McClaren Venge down their garbage disposal just to see what would happen.

Header
Header
11 years ago

@Dogpatch – you got that right. Specialized is a company that looks at lawsuits as a product development effort.

Specialized isn’t a brand I’ll consider for my next bike.

MTB
MTB
11 years ago

Actually, this is a victory for Specialized (and the lawyers). $1.8 million for specialized is nothing, basically loose change for them. $440K for Volagi could hurt them.

DDD
DDD
11 years ago

@DJ there’s more to differentiate the LIscio from the roubaix than there is between most carbon road bikes. Judge tossed that BS right out.

Speedy
Speedy
11 years ago

@DJ – REALLY? Have you looked at the rear of that bike. The split seat stays are VERY different. My close friend owns a Roubiax, I have ridden a Volagi. They are no where near the same bike. They are intended for the same audience, but design wise are pretty damn different.

Dave
Dave
11 years ago

I find it amusing that everyone is bashing Specialized, yet they are being the mature group when it comes to commenting. The Volagi owners are being immature if you ask me, bashing Specialized with smartass comments regarding the case before and after. An example is the “We can still paint the bikes red” comment. Seriously? That is a childish comment. A truly mature person would just say something like “Well the case went well, pretty much everything against us was dropped. Thanks to those supporting us.”

Saying smartass comments like they did shows their true colors, and as such, I will NEVER do business with them in any way.

And to those saying shops should stop carrying Specialized and other brands in many of the other posts about this case, please show me Pinarellos comfort line? How about Cervelos Mountain bikes? Carrying nothing but niche brands doesn’t work in most markets, which causes more shops to close, meaning more people collecting unemployment etc for you to whine about. Specialized makes great bikes for just about every type of riding, whether you like them or not. Bash all you want, but the fact is they have done many things correctly, developing many fantastic products that have clearly benefited the cycling world.

Robin
Robin
11 years ago

Kudos to Volagi!

jason
jason
11 years ago

@cjeder Trek is probably not the best example. I would like someone to come up with the lawsuit history of Specialized.

Nick
Nick
11 years ago

Anti-competitive b@llshit at it’s worst. I’ll be selling my Specialized gear on ebay and getting something else. I don’t want to support douches of this nature!!

go gadget go
go gadget go
11 years ago

Do you guys realize there are a lot of riders who don’t spend their time trolling the internet bike blogs and who know little or nothing of this? My point being that while this is some bad press for Spesh, it won’t affect them as deeply as some of you think.

Me? I’d buy a Spesh or a Volagi…or a Scott or a Hunter or a….whatever I found to work best for me. This particular case does not influence my opinion of their products.

Adamizer
Adamizer
11 years ago

Don’t forget all the employees that sell Specialized bicycles in shops. Myself and others have already steered customers to other brands at our shop. Specialized it already paying the price for being so dickish.

Sinyard Liberation Army
Sinyard Liberation Army
11 years ago

Just donated my dogshit Specialized floor pump to a local homeless charity/thrift store and will now happily live SPECIALIZED FREE. There’s NO reason anyone with a conscience should support this company; that their crap is ubiquitous in bike shops is a triumph of bullying, not design or quality.

Joshua Murdock
11 years ago

What Dave said!

Let’s look at it this way. You own a business. You started that business with nothing and built it over the course of 30+ years to be a leader in its industry. That company is your baby, your pride and joy, your biggest accomplishment.

One day you learn that two of your former employees used your companies time and resources to develop ideas that they are profiting from with their own private company. They didn’t take your ideas, but they used your company to develop them. Now they introduce a product that is in direct competition with one of your own. You are going to do what you can to protect your company.

Sure, the small sales numbers of Volagi road bikes had little chance of damaging Specialized’s reach over the industry, but allowing them to go unchallenged would set a precedent should any future issues arise. Mike Sinyard may not personally need the rewards of the legal victory and settlement, but I believe he cares about his employees enough to protect the company that supports them, and likewise for his customers.

Steve
Steve
11 years ago

Joshua summed it up perfectly.

Mortimer
Mortimer
11 years ago

Personal opinion here. Specialized and Volgai have got a lot of exposure for this. $440 000 might end up being a cheap way for them to get exposure. What has it done for the way I see Specialized? It’s tainted my view and I don’t care what argument you bring forth it was the wrong move. What’s the price of bad exposure?

John
11 years ago

Dave, it seems to me, either works for Specialized or is very close to them. The same may be true of Joshua Murdock, but in any event I simply cannot understand his sympathy for Specialized.

Maybe I can agree with Joshua that Specialized might have been angry at the Volagi guys for leaving Specialized to start a potentially competing business, but competition is a fact of business life, and how you respond to competition says a lot about your character.

For the sake of argument, let’s say Joshua is right that the Volagi guys were wrong to use Specialized’s “time and resources” to develop ideas they are profiting from with their own private company. But look at the jury’s verdict. By awarding only $1 in damages, the jury – which heard all the best evidence that Specialized and its $2 million legal team had to offer – obviously concluded that even if the Volagi guys had acted improperly, their conduct did not actually hurt Specialized in any meaningful way.

So Robert Choi apparently breached his employment contract in some inconsequential way that caused no actual damage to his employer. The question is, was his conduct so bad that it merited the response he received from Specialized? Should Robert have had to pay $400K in legal fees to defend himself against the $2 million onslaught from Specialized? Should he have had to cash in his retirement savings and mortgage his home? Should he have to face bankruptcy for his actions? Should he have had to endure the stress of a year and half of litigation and a two week jury trial? (I’ve been there – it’s the most stressful, miserable experience you can imagine.)

Did the punishment fit the crime, or was Specialized’s spending $2 million in legal fees to sue these guys way, way, way over the top considering that it was not even harmed by Robert’s actions (according to the jury)?

Joshua argues that Mike Sinyard was simply trying to protect his company and employees. I don’t buy that at all. This lawsuit was all about spite and vindictiveness and trying to exploit a minor technical breach of a contract to crush a couple of guys that he didn’t think would be able to withstand the costs of defending the lawsuit. I’m sure Sinyard figured these guys would cave and the case would never go to trial.

I think Sinyard brought this lawsuit because he was furious that two of his employees had the audacity to leave his company to start their own potentially competitive business and to send a message to his remaining employees that they had better not try to pursue similar dreams or else they too will risk facing financial peril at the hands of a well-funded, litigious bully.

As I wrote before, competition is part of business, but the response to competition defines character. If you admire the use of aggressive, mean-spirited litigation as a business strategy, by all means continue to defend and support Specialized. But if such tactics disgust you, as it does to me and many on this forum, then let’s patronize Specialized’s competition and encourage our friends to do the same.

gear
gear
11 years ago

Each time we head out onto the road we have to deal with people who think they have a right to push us around because they have a 2000 lb cage to hide in. You’d think the head of a bicycle company would try his hardest to not be perceived as a bully to potential customers who have grown to dislike bullies.

ExSpesh
ExSpesh
11 years ago

As a former employee of Specialized I might be able to offer some insight.First, Mike does think he owns the color red, 2x pantone 285 to be exact. Unfortunately, just because you have an internal brand standard doesn’t mean it is cause for ownership or copyrightable. My old co-worker, Nic Sims (head of pr) left the company a week befor this case…i don’t know but would love to presume it is because he didn’t want to stand up for Mike this time. Yes, Specialized posts dick money but so does every company in the bike biz. I don’t feel like this sets any kind of precedent for current or future employees because Specialized wil continue to mistreat them. Mike needs to quit trying moddel his company after car our electronic companies… Our market is a small one and he beds to carter to out if he wants to keep growing. I can coubt on two hands how many dealers I personally know that Mike owes money to…maybe he should start “growing cycling” there by spring the people who choose to support him by spending thousands upon thousands on his product with low minimums to make a return profit from. It is a high overhead environment to be a Specialized dealer. I know because I was one. The pursue to buy-in and then thepressure

ExSpesh
ExSpesh
11 years ago

…to not carry other brands is inexcusable. If he wants ever INDEPENDENT Bicycle Dealer to be a concept store, he should open it himself our better yet sell his product on consignment. Fact of the master is Mike isn’t concerned with growing the sport just his pocket. If he was he would be more appreciative of the people who support his company, his dealers. Pay them what you promised Mike!

ExSpesh
ExSpesh
11 years ago

Goddamn auto correct. Fact of the master is Mike owes his dealers money.

DJ
DJ
11 years ago

Dave, you are totally right!

the other Jay Dog
the other Jay Dog
11 years ago

Very chilly NE morning. Gotta throw on the extra gear for the sweet singletrack that awaits with my good friends. Can’t wait. Have a great ride!

Phlatalbert
Phlatalbert
11 years ago

I don’t know guys, my enduro is pretty effin sweet. It’s a natural occurrence that will help both companies culturally. Financially will Volagi be thriving in 5 years? I hope so. Will specialized lose much in five years because of this? Doubt it. Current attention spans wouldn’t indicate that they would. Just hope Volagi truly can bring a better product cuz different product won’t cut it. The village has heard them cry wolf so let’s see if they can deal with the wolf now and let’s see how many villagers will really help them.

Mallory
Mallory
11 years ago

@ DJ (01/13/12 – 7:16pm)

I quote…
“They should go back to and try to do something that at least don’t exist…or something that dosen’t have too much succes and try to look a little bit more genious.
Think volagi don’t look too genious.”
Ignoring the numerous spelling & grammatical errors within your post…We are all asking what the hell is “genious”?
Some advice…Spend more time re-reading & spellchecking your posts before hitting that submit button. Your post made many of us feel sad about the current state of our education system…

TheDude
TheDude
11 years ago

@ Mallory

F-ing right, sister. 🙂

Duder
Duder
11 years ago

@Nick,
Do you have links of these products? I would like to buy them

CSRD
CSRD
11 years ago

The Weagle/Trek example is apples and oranges to this case. If Weagle had worked at Trek, then left and less than a year later was selling a fully baked split-pivot design, then you better believe Trek would have sued. And they would have also won for breach of contract and the damages would have been a lot more than $1 because the case would have been tried in Wisconsin instead of California.

I am a product designer in the sporting goods business and if I did what Choi and Forsman did I would be in court and I know I that I would be guilty of breach of my employment contract which contains a non-compete clause.

I get the sense in general that Sinyard is not a nice guy. But this isn’t a matter of nice guys versus a-holes or big versus little. As a company, big or small, you can’t allow a precedent to be set of not enforcing your own employment contracts. And, believe it or not, protecting the company’s interests are not only in Sinyard’s best interest, but it is also in the best interest of the receptionist, the guys in the warehouse, the guy in customer service with 2 kids in college, etc.

Paul
Paul
11 years ago

Never buying another Specialized.

bob
bob
11 years ago

I don’t get the tech details and deep legal issues. As a consumer, as someone whom goes into a shop and spends money, as there are so much choice in what to buy, as someone ready for a new bike and as someone whom recently test rode a Specialized; this has helped narrow down my decision and I can strike Specialized off my list. Such litigation may not, in the end, be in the best interest of a single employee of the big S at all.

JESUS CHRISTO
JESUS CHRISTO
11 years ago

The fact of the matter is that these guys sign contracts when taking this job that says any ideas created while youre employed is Specialized. While I don’t agree with intellectual rights ownership etc, the ability to be surrounded by high tech information, 3d printers, CAD designers, etc, DOES lead to being able to have the resources to do things like this. Unfortunately for them, Specialized had a pretty good paper trail of these guys indeed breaking their contracts.

Not impressed with either side of this, and I won’t be buying any shitty Specialized frame because they suck, not because they are classic free market capitalists.

Robin
Robin
11 years ago

Jesus Christo: no, Specialized did not have a pretty good paper trail of “these guys indeed breaking their contracts” because the jury found only one guy did. The jury thought his actions were so grevious their judgement against that guy, Robert Choi, was one whole dollar.

Please note that is all the jury found.

Drew
Drew
11 years ago

Just what I need to see, patent wars in the bike industry. So I’ll only mention this once, remember the next time you pick up your iPhone, that Apple uses these exact legal strategies.

notapro
11 years ago

Drew is right on the money. “i’ll never buy a specialized” is so dramatic and hypocritical all things considered.

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