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Specialized Goes Nuclear

Business at Specialized must be down.

They tried to force dealers carrying Giro product to end any relationship with Giro. I'm sure that they got a large number of dealers to quit selling Giro before the company that owns Giro figured it out. Now Giro is taking Specialized to court. http://www.bicycleretailer.com/news/newsDetail/5940.html This kind of business tactic is very common in retail.

Specialized is suing former employees for building an arguably better bike: http://www.mercurynews.com/breaking-news/ci_19662131

Sinyard is trying to take on Amazon too: http://www.bicycleretailer.com/news/newsDetail/6322.html What's interesting is the MSRP policies mentioned make online retailing even richer. Despite the manufacturer's best intentions, they are killing the LBS anyway.


All of this was on BikeSnobNYC today.
 
BroDeal said:
Bell withdrew the Giro suit a while ago.

Specialized has always pulled this sort of crap. I would never buy anything from them.

I'm no lawyer but it sounds like they want a Federal case instead of a California-based case.

more extensive relief throughout all markets that were affected by the choice-limiting campaign without the territorial limitations imposed by the California courts

http://www.bicycleretailer.com/news/newsDetail/6198.html
 
Mar 12, 2009
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Poor old Specialized, running out of ideas again, then saddly tries sueing a pair of guys who have a proven track record of bring commerically viable innovative products to the market.
I think at last count between them the Volagi boys have over 40 registered patents to their names! How many does Sinyard have?
 
fiftyfour eleven said:
Poor old Specialized, running out of ideas again, then saddly tries sueing a pair of guys who have a proven track record of bring commerically viable innovative products to the market.
I think at last count between them the Volagi boys have over 40 registered patents to their names! How many does Sinyard have?

Sinyard doesn't need any. He just steals whatever he wants. The whole company was founded on stealing Tom Ritchey's design.
 
Mar 17, 2009
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BroDeal said:
Sinyard doesn't need any. He just steals whatever he wants. The whole company was founded on stealing Tom Ritchey's design.

What importing Cinelli using the proceeds of your VW bus? Lol
 
ultimobici said:
What importing Cinelli using the proceeds of your VW bus? Lol

Poor choice of words on my part. The company owes its success to the mountain biking boom. Its MTB frame business was started by buying a couple of Ritchey's frames and sending them to Japan to be cheaply copied. It is ironic that they flip out when they think people are copying their work.
 
Here is what the Volagi founder posted to Facebook:

"Setting the Record Straight
By Barley Forsman (Volagi Co-founder)
Jan, 4th, 2012

Specialized is suing us (Robert Choi, Barley Forsman, and Volagi, LLC) - whew, there I said it!! It's been a long, very rough road and we've paid through the teeth for the privilege. But we are endurance athletes and will endure.

Well over a year ago, exactly one month after we launched Volagi at InterBike 2010, a man approached the front door of my house, knocked on my door, handed me a folder, and told me that I "had been served". I was shocked and dumbfounded as I struggled to decipher the legal jargon presented to me - what could I have possibly done wrong?! There was no warning, no call, no e-mail, no letter, no 'cease and desist' - just a lawsuit.

Robert and I have known each other since 1997 - when he hired me as a designer at Bell Sports (now, Bell-Easton). We have a long history of innovation - long before we even considered a position at Specialized. Before joining Bell, Robert started a company called VistaLite in 1989 that pioneered flashing safety lights for bicycles - which he eventually sold to Bell. I worked with Robert at CamelBak for almost 10 years. At CamelBak we helped to redefine the hydration industry, several times. Combined, we have nearly 40 patents to our names - all amassed long before joining Specialized.

In 2008, we joined Specialized (ironically, I started 1 day before Robert). Robert was hired as "Director of Equipment" and I was hired as "Design Manager". Robert's primary responsibilities included product development for accessories: bottles, pumps, tools, tires, and some components (briefly). My primary responsibility was to act as the design resource for saddles, grips, bottles, bottle cages, etc. - again, mostly equipment. Aside, for a few top-tube shapes on a few entry level aluminum mountain bikes, I had no involvement in bike design and engineering. As a designer, I was not responsible for, nor did I have access to carbon engineering or manufacturing of carbon bicycles while at Specialized.

The impetus for starting Volagi was born from a general discontentment from working at Specialized (and the Specialized 'method' of product creation), but more importantly, we wanted to create a company that focused solely on the type of riding that we love: endurance road cycling. We are AVID distance cyclists who have completed many difficult endurance events including: Paris Brest Paris (760 non-stop miles), The Furnace Creek 508 (508 non-stop miles), over 60 doubles in California alone, many, many 'brevets', and countless centuries. Needless to say, we have put a lot of time in the saddle.

We wanted to start a company that focused on the real, everyday cyclist - a performance bicycle specifically suited to our type of riding. If you want a bike for the Tour de France, there are a lot of options out there for you, but that is not us. It's a small but fundamental difference in our approach to the road cycling market: what works best for Lance may not work the best for you.

So why is Specialized suing us?! Truth is, we're still trying to figure that out. But here are some basic facts about Volagi and our bike:

- The Volagi bicycle was not designed, engineered, or created at Specialized, or with any Specialized equipment or know-how.
- Robert and I were not involved in engineering or design meetings at Specialized about bicycles while we were there.
- The Liscio was never presented or shown to Specialized because we did not have it while we worked there.
- The bicycle was designed and engineered AFTER we gave notice at Specialized (at that time we informed Specialized that we would be starting a company in the bicycling industry).
- The Volagi Liscio patent was filed AFTER we left Specialized (by us).
- Volagi was not registered as a company until after we gave notice.
- We have made many attempts to resolve this (or any issue) with Specialized. It was never our plan (or desire) to have it go this far - we never thought it would.
- We took names of bicycles shops that were listed in a Specialized database (that is really the extent of our evil deeds, and we admit this wrong-doing and have returned everything). FYI, all this information is readily available online, but we want to come clean.

Again, these are the facts as we know them and we are confident that the truth will prevail in court. It is a shame that we have been forced to defend ourselves for this long. We have spent hundreds of thousands of dollars and sold our houses to finance all the legal proceedings - we will not allow Specialized to bully us out of existence. This is our dream and we will fight to the end to keep it.

We're not asking for your sympathy or your pity - we know in our heart what is right. But we would like to supply some relevant facts so you can make up your own mind about the situation. In the end, we only want to compete in the marketplace. We want to give cyclist the options to choose what bicycle they think is best for them - no smoke, no mirrors, just truth.

We have, and will continue to have "The Will to Go!"

Regards and tailwinds,

Barley"
 
Jul 17, 2009
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They probably sent their cronies and an attorney to every shop and threatened to pull product.

I remember when they tried to enter the shock and fork market. An aftermarket company who specializes (no pun) in suspension rebuilding and tuning received a visit from Specialized Hench men after a customer posted on MTBR that they sent their "New Specialized Fork in for a rebuild". all sorts of legal ballyhoo about copyright etc....nothing happened but it is an ominous presence and unneeded pressure on an independent business tying to make it in the business. Totally unnecessary


I fear for the LBS who took on some Specialized product in limited amounts now.
 
Sep 16, 2011
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Amazing.

Specialized is flipping out for a company that admits they've sold 375 bikes to date. How many bikes get crapped out onto the market with the big "S" every year? Millions?

Maybe Sinyard is roid raging ala Ocean Marketting. ;)
 
Another interview with Choi.

http://cyclingiq.com/2012/01/06/specialized-v-volagi-open-and-shut-lawsuit/

Check out this choice quote:

What was it about, specifically, that drew you towards Specialized?
I had known Mike Sinyard since when I started VistaLite in the late 1980’s; partly through the fact that Specialized was the first company, in a sense, to violate the patent I had for VistaLite. Is that ironic or what? I sent them a Cease and Desist letter, because they were one of the first companies to try to copy our flashing LED light. That’s when I met Mike, through that incident. I wasn’t able to stop them at the time; they were still a much bigger company
 
Parera said:
Interesting.

I'm still confused about how Specialized can be griping about a non-compete clause, which are automatically void in the state of California. So I can only assume that the case hinges whether Volagi stole "trade secrets" from Specialized.

There is no case.

The goal is to close the small competitor by taking all the revenue and flushing it down the drain as legal fees to defend themselves. If the small business can scrape along, eventually they get to the "Oh, nevermind." moment days before going to trial. Specialized then starts a new round of litigation the next day intentionally never intending to go to trial.

This tactic is very common.
 
Mar 17, 2009
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BroDeal said:

This bit is interesting
1. Breach of contract Specialized alleges the pair violated a contract clause in which they promised not to "directly or indirectly participate in or assist any other person, organization, business, or demonstrably anticipated business which is a current or potential supplier, customer or competitor of the Company."

Specialized also claims the pair broke a contract clause barring them from revealing confidential company information.

The contract defined confidential information" as "all information related to any aspect of Specialized's business which is either information not known by actual or potential competitors of the company or is proprietary information of the company, whether of a technical nature or otherwise."

Choi does not dispute that he forwarded his wife, Volagi customer relations manager Karen Choi, about 30 of Specialized's sales force's call reports, which contain information about current and potential dealers. But Choi denies that Volagi made use of the reports, which he says in any case were out of date. He later returned the reports to Specialized and destroyed his copies.

Choi also does not dispute that he emailed a copy of Specialized's 2012 Product Plan to his Volagi email account while in Asia on Specialized business in May 2010. But Choi says he only sent it to his Volagi account because he was having trouble accessing his Specialized account and needed to have access to the file in Asia. He says the information in the file was not related to any product that Volagi sells and that he later returned it to Specialized and destroyed his copy.

Methinks there is merit to Specialized's case, not just a spoiling tactic but real meat.
 
perhaps there might be something to it ...

but seriously - this bit
"directly or indirectly participate in or assist any other person, organization, business, or demonstrably anticipated business which is a current or potential supplier, customer or competitor of the Company."

is a pretty vicious non-compete clause. They are seriously requiring that the guys say they will not work in the bike industry at all.

Is there a time frame on that? Any other restrictions?
 
Sep 16, 2011
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ultimobici said:
This bit is interesting


Methinks there is merit to Specialized's case, not just a spoiling tactic but real meat.

I will repeat, non-compete clauses are ILLEGAL in California. That first bullet point is rendered meaningless. The NDA is the sticking point for these two.
 
The weird thing is that Specialized wants the two to hand over their patent and pay royalties on each bike sold but none of the claims seem to support that Specialized should have any right to it. The trade secret stuff all looks to be about business contacts, schedules, and such, not product technology.

The part about Choi offering to pay Forsman's salary if he would join him in the startup seems laughable. You cannot leave your job for a startup if the startup has enough capital to pay your bills?

I did find some information that might indicate that the two were putting a large target on themselves. The bike was originally called the Venga. I am not sure when Specialized Venge first came out or might have been talked about within Specialized.
 
Jan 13, 2010
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BroDeal said:
I did find some information that might indicate that the two were putting a large target on themselves. The bike was originally called the Venga. I am not sure when Specialized Venge first came out or might have been talked about within Specialized.

The longbox flex stay design is patented. Evidently Choi and Forsman started working on it while still at Specialized, and evidently they had intellectual property clauses in their employment contracts. Specialized is smart to keep quiet while a trial is going on. If only Choi could be convinced to do likewise.
 
BroDeal said:
The weird thing is that Specialized wants the two to hand over their patent and pay royalties on each bike sold but none of the claims seem to support that Specialized should have any right to it. The trade secret stuff all looks to be about business contacts, schedules, and such, not product technology.

The purpose of all of this is to generate legal bills that overwhelm the company's ability to stay open.

The patent litigation is a ruse that allows Specialized to examine most aspects of the business in great detail. And it generates lots of legal bills to sink the new business. If the small business manages to stay open long enough, the patent litigation will end without a trial and then Specialized sues again this time using Trademark infringement as the excuse. Or, they could go another round on 'Trade Secrets.' The litigation should never reach a trial. That would be a failure for Specialized legal counsel.

BroDeal said:
The part about Choi offering to pay Forsman's salary if he would join him in the startup seems laughable. You cannot leave your job for a startup if the startup has enough capital to pay your bills?

I did find some information that might indicate that the two were putting a large target on themselves. The bike was originally called the Venga. I am not sure when Specialized Venge first came out or might have been talked about within Specialized.

The simple fact they entered the bike business is enough to litigate. Similar litigation happens all the time in the Tech industry. The problem here is Specialized hates the competition and Choi/Forsman have a niche hit. Had Choi/Forsman done yet another race-geometry bike it wouldn't have generated any heat.

It sounds like Choi either put his personal savings on the line for Forsman, or Choi had a backer. Either is possible.

Venga is 'go' in Spanish. It's business 101 to use unique trade names. So, unless they were complete idiots, venga was at best a project name. If they called the project 'venga' that's enough for Specialized to litigate.

Finally, I'm not a lawyer but those contracts should not survive the employer/employee relationship. I could be totally wrong about that.

I've never seen an NDA that couldn't be successfully voided. Most are written with the understanding that the person signing it doesn't know much of the NDA is unenforceable. The idea is the person signing the NDA won't pay to challenge the NDA. It's a form of intimidation.