It looks like a lawsuit between Gates Corp. and Spot Bikes will be going to trial after a judge’s recent rulings. As reported in The Colorado Sun and The Denver Post, the two Colorado-based bike brands have been at it in the courts for nearly two years. And, thus far, things aren’t going Gates’ way.
If proceedings continue to head in that direction, it might cost Gates tens of millions.
A Bit of Background
Okay, so this story dates back to 2008–not the lawsuit, but the story. Gates Corp. debuted its carbon belt-drive system that year, promising to revolutionize the bike industry.
However, there was a problem. No, it wasn’t the fact that for a hundred years bikes had been dominated by chain-driven drivetrains. The issue was how frames are designed.
Bike frames have a solid rear triangle, and a belt needs to pass through it. Obviously, with a chain, there is no issue, since a link can simply pop apart and be reassembled. This isn’t the case with Gates’ new carbon belts.
So, Spot came up with a solution, creating the appropriately named “Drop-Out.” Essentially, the dropout area of the rear triangle separates, allowing the belt to slide over the chain–uh, beltstay(?).
Spot struck up a deal with Gates, allowing the belt-drive giant to license the technology to other frame manufacturers. In return, Gates promised to pay Spot a royalty on profits related to companies licensing the Drop-Out design from Gates.
Well, apparently, Gates never paid up. And, the numbers are pretty big. By 2011, 54 brands used a belt drive on almost 100 different models. By the time Spot filed a lawsuit in 2024, 1,000 bike models from 135 brands were equipped with the belt-drive system.
And, according to their original agreement, Spot says they are owed 8% on all of these. Adding the sales up over nearly 20 years, it is a significant chunk of change.
Recent Court Rulings
A Colorado judge’s decision on February 17th denied Gates Corp.’s attempt to countersue Spot. This ruling follows a September ruling, also against Gates, that claimed Spot’s design and patent on the Drop-Out was “invalid.”
Now, a jury of their peers will hear the dispute between the two bike brands. Both previous rulings, in favor of Spot, mean that lawyers on both sides will now look to schedule a trial.
Currently, Gates is attempting to appeal to a higher court, seeking to have the case bumped from the state to the federal level. However, the judge doesn’t want to delay the proceedings longer.
Perhaps these two will be in a courtroom sooner than later.
