Bike Buzz: Specialized Faces Lawsuit

In a classic David vs. Goliath case that had the bicycling community abuzz, two owners of a small Cotati bike company were in a San Jose courtroom last week battling cycling giant Specialized.

At issue was a noncompete clause signed by Barley Forsman and Robert Choi when the two were hired at Specialized, which is based in Morgan Hill, in 2008. Though they left Specialized in 2010, the lawsuit alleged the partners’ new company, Volagi, represents a violation of that clause. In a pre-trial brief, Specialized claimed Forsman and Choi “stole its trade secrets” and started a competing company while employed with Specialized. Demands included damages, restitution of wages, ownership of Volagi’s Longbow Flex technology patent, royalties for Volagi sales and $1.5 million in attorney’s costs.

But following a two-week trial, a jury for the Santa Clara County Superior Court delivered a mixed verdict: Choi was found to have violated his contract with Specialized because he started planning his own company while still employed; and he was ordered to pay a whopping $1 in damages.

The “Big S,” as Specialized is known in the industry, released a statement saying, “We are very satisfied with the outcome and the damages set at $1. This lawsuit was a matter of principle and about protecting our culture of trust and innovation.”

Very satisfied? We’re sure.

Chatter about the lawsuit caught fire on sites like Bike Radar, VeloNews, Bike Rumor and CBS News. And according to some in the local cycling community, Specialized’s fight against the Sonoma County startup has generated ill will.

“It’s ridiculous what Specialized is trying to do,” says Jeremy Sycip of Santa Rosabased Sycip Bikes. Sycip, an expert frame builder who gave a deposition to Specialized’s lawyers, notes that Specialized originally went after Volagi for calling their frame “Venga.” Specialized had a frame in development at the time called “Venge.”

Then, Sycip says, Specialized claimed Volagi’s frame looked like the Roubaix, a Specialized frame. He notes that the case was based on a noncompete clause. “It kept on changing, which to me is ridiculous. Obviously, they were just trying to go after them and trying to buy time, basically, to put these guys out of business.”

Citing oftentimes questionable copyright claims, Specialized has repeatedly used its legal muscle against custom bike companies, says Sean Walling, owner of Soulcraft Bikes in Petaluma. He adds that the company is notorious for forcing independent dealers from carrying competing brands. “Especially people on the industry side of things, they’ve known what’s been going on for a long time,” Walling says.

Several bike store owners in Morgan Hill and San Jose said they had heard of the legal clash, but many declined comment.  Soulcraft’s Walling says that even if Specialized technically won the case, the breach of goodwill in the bike community represents a net loss.

“There are a lot of people who see the bike industry as somehow different from other industries that are more competitive,” he says.

 

 

 

 

 

 

 

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