Peloton Interactive v. Echelon - Complaint

Case 1:19-cv-01903-UNA Document 1 Filed 10/08/19 Page 1 of 47 PageID #: 1
IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF DELAWARE
PELOTON INTERACTIVE, INC., )

)
Plaintiff, )
) C.A. No. ______________
v. )
) DEMAND FOR JURY TRIAL
ECHELON FITNESS, LLC, )
)
Defendant. )
COMPLAINT FOR PATENT INFRINGEMENT,

TRADEMARK INFRINGEMENT, TRADE DRESS INFRINGEMENT,
TRADEMARK AND TRADE DRESS DILUTION, TRADE LIBEL,
FALSE ADVERTISING, AND UNFAIR BUSINESS PRACTICES
Plaintiff Peloton Interactive, Inc. (“Peloton”), through its attorneys at Hueston Hennigan
LLP and Morris, Nichols, Arsht & Tunnell LLP, hereby brings this action against Echelon
Fitness, LLC (“Echelon”), and alleges as follows:
SUMMARY OF THE ACTION
1. Since its inception in 2012, Peloton has disrupted the fitness industry, becoming
the largest interactive fitness platform in the world with a loyal community of over 1.4 million
members. Peloton has delivered more than 400,000 Peloton bikes (“Peloton Bike”), and, in
fiscal year 2019 alone, its members completed over 58 million Peloton workouts. The Peloton
Bike has received near-universal adulation, with Men’s Health naming it “the best cardio
machine on the planet.” Peloton now employs more than 1,900 people across the country and
earned more than $900 million in revenue in fiscal year 2019.
2. With Peloton’s hard-fought success, competitors, including Defendant Echelon,
have attempted to free ride off Peloton’s innovative technology. Rather than develop new
technology, Echelon chose to simply appropriate Peloton’s intellectual property and flood the
market with cheap, copycat products. Echelon similarly chose to copy Peloton’s federally
registered trademark and the Peloton Bike’s distinctive trade dress, including but not limited to
Peloton’s distinctive logo, coloring, and font. Unsurprisingly, the market has taken notice: on
August 28, 2019, The New York Times published an article calling Echelon’s products “a blatant
knockoff” of Peloton’s, right “down to a round black logo.”
3. With its Smart Connect EX1, EX3, EX5, and EX5s bikes, Echelon specifically
infringes the Peloton Patents by, among other things, displaying live and archived cycling class
content to remote riders, tracking a remote rider’s performance, and comparing that remote
rider’s performance against the performance of other remote riders. Echelon also infringes the
Peloton Patents by imitating the Peloton Bike experience through the “Echelon Fit App” which,
among other things, detects, synchronizes, and compares the ride metrics of remote users on a
graphical user interface.
4. Echelon has also unlawfully engaged in a false advertising campaign in an effort
to further undercut Peloton’s business. For example, Echelon has disseminated advertisements
that mislead customers by claiming Peloton’s “Bike Price” is $2,245, while Echelon’s “Bike
Price” is $999. In truth, Peloton’s “Bike Price” includes the actual bike and a 22-inch high-
definition touchscreen display, while Echelon’s “Bike Price” includes only the actual bike—to
use their service, Echelon customers are forced to purchase their own display device at a cost of
hundreds of additional dollars. Echelon misleads customers by comparing deceptive price
points. In fact, the Echelon product that does include a touchscreen and is thus the proper
comparator sells for $1,639.98, not $999. And even that $1,639.98 price point does not include
shipping or assembly. Echelon’s standard shipping and assembly costs $399.98, meaning that
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the accurate comparator price of an Echelon bike is $2039.96 – just $200 less than the $2,245
price of a Peloton bike, which includes both delivery and setup. Echelon is thus misleading
customers with deceptive comparisons and continues to sell the bikes widely promoted in these
false and misleading advertisements.
5. Echelon also misrepresents to consumers that Peloton’s workouts are limited to
“‘After The Ride’ + Cross Training Workouts” while Echelon purportedly provides “‘FitPass’
featuring trainer-led yoga, stretching, pre-and-post workout sessions, meditations, pilates,
kickboxing, Zumba and more.” In fact, Peloton workouts also include instructor-led yoga,
stretching, pre- and post-workout content, meditation, bootcamp, indoor and outdoor running and
walking, and more—far more than Echelon offers. Echelon also falsely tells consumers that
Peloton has only 12 instructors while Echelon has over 30 trainers—Peloton actually has 29,
while Echelon has only 17 trainers featured on its website.
6. Through its false advertising campaign, Echelon has engaged in unfair
competition by, among other things, misleading customers about the price of the parties’
products, misrepresenting the breadth of Peloton’s workouts, and deflating the number of
instructors Peloton has while inflating the Echelon offering. As a result, Echelon has unfairly
stolen customers from Peloton and attracted funding from investors that has reportedly brought
Echelon’s total valuation to over $100 million.
7. Peloton brings this suit to protect its rights and put an end to Echelon’s patent
infringement, trademark infringement, trade dress infringement, trademark and trade dress
dilution, trade libel, false advertising, and deceptive business practices.
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THE PARTIES
8. Peloton is a corporation organized and existing under the laws of the State of
Delaware, with its principal place of business at 125 West 25th Street, 11th Floor, New York,
New York, 10001.
9. Echelon is a corporation organized and existing under the laws of the State of
Delaware. On information and belief, Echelon’s principal place of business is at 1400 Market
Street, Chattanooga, Tennessee, 37402.
JURISDICTION AND VENUE
10. Certain claims in this civil action arise under the patent laws of the United States,
35 U.S.C. § 1 et seq. This Court has subject matter jurisdiction over the patent claims pursuant
to 28 U.S.C. §§ 1331 and 1338. Certain claims in this civil action also arise under the Lanham
Act, 15 U.S.C. § 1125. This Court has subject matter jurisdiction over the Lanham Act claims
pursuant to 15 U.S.C. § 1121 and under 28 U.S.C. §§ 1331 and 1338. Subject matter jurisdiction
over related state and common law claims is proper pursuant to 28 U.S.C. §§ 1338 and 1367.
The state law claims are integrally interrelated with Peloton’s federal claims and arise from a
common nucleus of operative facts such that the administration of the state law claims with the
federal claims furthers the interest of judicial economy.
11. This Court has personal jurisdiction over Echelon pursuant to the laws of the State
of Delaware and the United States Constitution because Echelon is a Delaware corporation.
Echelon also regularly and continuously transacts business in the jurisdiction, including
marketing and selling Echelon services and products throughout the State of Delaware. Echelon
places infringing products within the stream of commerce, which stream is directed at the State
of Delaware, with knowledge and/or understanding that those products will be sold in the State
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of Delaware. Echelon has also disseminated false and misleading information in the State of
Delaware about both the Echelon and Peloton products and services as part of its marketing
campaign.
12. Echelon has infringed or caused infringement in the State of Delaware by, among
other things, promoting, offering for sale, and selling the infringing Echelon Bikes in the District.
Echelon also provides services and assembles products that are and have been used, offered for
sale, sold, and purchased in the State of Delaware. Therefore, the exercise of jurisdiction over
Echelon is appropriate under the applicable jurisdictional statutes and would not offend
traditional notions of fair play and substantial justice.
13. Venue is proper for claims in this district under 28 U.S.C. §§ 1391(b) & (c) and
1400(b) because Echelon is incorporated in the State of Delaware and has committed, and
continues to commit, acts of patent infringement, unfair competition and false advertising,
trademark infringement, trade dress infringement, trademark and trade dress dilution, trade libel,
and deceptive trade practices within the State of Delaware.
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FACTUAL ALLEGATIONS
I. Disrupting the Fitness Category
14. Since being founded in early 2012, Peloton has revolutionized the fitness industry
with its category-creating at-home cycling bike, the Peloton Bike. Unlike the at-home bikes that
came before it, the Peloton Bike is a sleek, technologically advanced system that combines a
first-in-class exercise bike with state-of-the-art technology that allows riders to experience live
and on-demand cycling classes—led by some of the world’s best instructors—from the comfort
of their own homes.
15. Featuring a 22-inch high-definition, sweat resistant, multitouch tablet, the Peloton
Bike measures and displays a rider’s performance metrics and presents those metrics for live or
time-synced comparison with other Peloton riders. This new technology allows Peloton riders to
see where their performance stands against all other riders on a leaderboard throughout the
cycling class, re-creating the energetic and competitive in-studio cycling experience at home on
their own schedule.
16. In fact, not only does Peloton recreate the in-studio experience, it improves it. A
rider taking a regular in-studio class may see his or her performance compared only against the
other riders in the same class at the same time. The same rider taking a class on a Peloton Bike
can see her performance compared, at every point in the class, against hundreds (for a live class)
or even thousands (for an on-demand class) of other riders from around the world, regardless of
when they took the class. In addition, the Peloton Bike allows its riders to interact with other
remote riders during a class, for example by giving a virtual “high five” to another rider,
encouraging a friend via live video chat, or saving a song heard in class to their favorite
streaming service. These features are not available or useful for in-studio-only cycling classes.
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Above: The Peloton Bike
Above: The Peloton Graphical User Interface and Leaderboard
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Above: The Peloton Graphical User Interface, Leaderboard, and Live Video Chat
17. Peloton’s success has been remarkable. Men’s Health has called the Peloton Bike
“the best cardio machine on the planet.” USA Today has said it is “attractive, addictive, and
seriously whips you into shape.” And in a comparison of numerous at-home bikes, The Wall
Street Journal concluded that “the best bike, by far, was [the] Peloton.” The Peloton Bike also
received the award for the Best Health and Fitness Device at the Consumer Electronics Show in
2018.
18. The Peloton Bike retails for $2,245 (which includes the $250 delivery and set-up
fee), and owners pay $39 per month for a subscription to Peloton’s exclusive live and on-demand
cycling classes as well as other exercise content.
19. To date, Peloton has delivered more than 400,000 Peloton Bikes, building its
member base from zero to over 1.4 million in seven years. Its revenue has been growing rapidly
as a result. For example, in fiscal year 2017, Peloton’s revenue shot to over $200 million, and in
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fiscal year 2018, doubled to over $400 million. In fiscal year 2019, its revenue more than
doubled again to approximately $900 million. Peloton has also won countless awards, including
being named one of the World’s Most Innovative Companies by Fast Company in 2016, 2017,
and 2018.
II. The Journey to Inventing the Peloton Bike
20. When Peloton was founded, fitness studios that provided studio cycling classes
were becoming tremendously popular. SoulCycle and Flywheel had multiple studios and were
growing quickly. While in-studio classes provide a great consumer experience, they start at
predetermined times, have limited space per class, and require travel from one’s home or office
to the gym or studio. As a result, in-studio classes can be hard to attend for people with busy
work schedules and families at home. Peloton founder and CEO John Foley was one of those
people.
21. After realizing that countless others undoubtedly faced the same challenge, Foley
began a journey that would see him and his co-founders invent a new category of fitness
equipment that provides the immersive, fun and competitive in-studio cycling class experience,
at home, at any time.
22. Having majored in industrial engineering at Georgia Tech and studied business at
Harvard Business School, Foley then worked in e-commerce and the tech industry for over a
decade. This gave him a sophisticated understanding of the intersection of business and
technology. However, Foley also realized that this project would require a team of smart, savvy
leaders in different fields to bring it to consumers, and he therefore started recruiting other tech
leaders who shared his vision.
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23. Foley approached his friend and former colleague, Tom Cortese. Over dinner one
night in 2011, Foley told Cortese that he believed there was a large, untapped market available if
they could just figure out how to allow cycling fans to access the best instructors and have the
same in-studio cycling class experience at any time, no matter where they live and no matter how
busy their schedules are. Cortese joined and has been with Peloton ever since, currently serving
as Peloton’s Chief Operating Officer.
24. Foley also recruited three others, whom he asked to join as co-founders of
Peloton: technological guru Yony Feng, to help design and build a prototype Peloton Bike;
accomplished lawyer Hisao Kushi, to guide Peloton through the legal and regulatory framework
facing the new start-up; and internet executive Graham Stanton, to help guide the company
through its early years and to manage the company’s finances and growth strategy. All accepted,
and all three remain with the company to this day. Feng is Peloton’s Chief Technology Officer;
Kushi is Chief Legal Officer; and Stanton is Senior Vice President, Business Intelligence.
25. With a strong team in place, Foley was able to raise an initial seed investment of
$350,000, along with $50,000 of Foley’s own savings. This allowed the young start-up to rent a
small office in New York City from which it could develop and create the first prototype of the
Peloton Bike.
26. To create the product that Foley and his co-founders envisioned, Peloton
developed (1) a visually appealing, sturdy, and technologically advanced exercise bike; (2) a
large, sweatproof, wi-fi enabled, high-definition touchscreen tablet computer; (3) an attractive
graphical user interface and related software and backend systems to integrate the bike and tablet
and track, synchronize, and dynamically display metrics; and (4) first-in-class cycling class
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content and the systems to deliver that content. All equipment needed to be durable, lasting for
years with minimal maintenance.
27. Start-ups will often partner with existing companies and products to custom build
as little as possible. Building one’s own hardware and software from the ground up, by contrast,
is expensive, time-consuming, and fraught with obstacles, known and unknown. However,
Peloton quickly discovered that no existing exercise bike had all the required characteristics:
sturdiness, durability, visual appeal, efficiency, and technological capability. Nor was there any
touchscreen tablet available on the market at the time that would suit its needs. In addition,
Peloton realized that no existing products could communicate with the bike hardware, or track
and analyze rider performance in the way they envisioned. In short, the Peloton team quickly
realized that it would need to create virtually the entire Peloton Bike from scratch, including the
bike and tablet.
28. What’s more, to effectuate its vision of immersive studio cycling at home, Peloton
also needed to figure out how to integrate the hardware (the bike and tablet) with its own
software so that the software could communicate with the bike to track performance metrics,
store those metrics, communicate those metrics back to the rider, and transfer those metrics to a
server so that they could be synchronized and compared with other riders’ metrics.
29. The technological challenges and unknowns faced by the Peloton team also
created a significant financial hurdle. Investors viewed Peloton’s plan to build its own hardware
and software as too costly and difficult and were not convinced there was a viable market for the
product. Dozens of investors declined the opportunity to invest in Peloton because they were not
willing to take the risk of investing up front in such a new and challenging endeavor.
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30. Yet through research, ingenuity, and persistence, Peloton pushed on, working
with partners to design and produce the necessary high-tech, sleek bikes and tablets. To build
the first prototype, Feng, the Chief Technology Officer then and now, created a proof-of-concept
apparatus using a standard off-the-shelf stationary bike, then attaching sensors with a stripped-
down electronics board running the Android-based app that he developed and a computer
monitor rigged to the bike’s front. As reflected in the images below, Feng went through a long,
iterative process to develop a successful hardware-software integration.
The Peloton Bike’s software and tablet evolution:
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The early version of the Peloton Bike, left, compared with the version at launch, right:
Testing the software with an early version of Peloton Bike:
31. This unique hardware-software integration would be the basis for Peloton’s
prototype. By the end of 2012, after a year of hard work, investment, and development, Peloton
finally had a prototype in hand to show investors.
32. But even after the Peloton Bike prototype was created, Peloton struggled to raise
money. Foley was rejected by countless investment firms and was repeatedly told that the
Peloton Bike simply was not viable.
33. Yet, despite these repeated rejections, Foley persisted—continuing to take risks,
making significant personal investments, and dedicating more time to developing the best
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possible product. He did so because of his belief that at-home fitness equipment simply had not
evolved at the same pace that group exercise classes had. He continued to pitch potential
investors until, many rejections later, he found a group of investors who believed in Peloton and
invested the first $10 million that helped launch the Peloton Bike on a commercial scale.
III. Bringing Peloton to Market
34. After extensive troubleshooting and tinkering on the early prototype bikes,
Peloton was ready to take the important step of manufacturing the bike and selling it to its first
customers. Peloton held a Kickstarter campaign with the goal of raising enough capital to start
manufacturing the bike. As Peloton explained, “[t]his involves building the ‘tools’ required to
create each unique part (yes, we first have to build the machinery that will build the bike!) and
pre-purchasing lots of steel, aluminum, plastic, microchips (there are 17 in our console alone).”
The Kickstarter campaign raised more than $300,000 and generated initial orders for 188 bikes.
35. Sales were initially slow—188 bikes was far from Peloton’s target, and far from
the demand Foley knew existed. Peloton was a new product, and people were wary of the
product and how useful it would be. Like every other phase of their journey, Peloton was not
going to become successful overnight—they were going to have to work for it. With intensive
and creative marketing efforts, including pop-up stores in choice locations, and as word of mouth
spread, sales began to pick up.
36. In January 2014, two years after Peloton was founded, the first bikes were
delivered to customers.
37. By now, Peloton has designed in-house almost everything that other companies
outsource to third parties: hardware, software, content, and logistics. As an Inc.com article
reported, “Peloton has defied every aspect of the prevailing startup ethos of doing it fast and
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lean, buying off the shelf, partnering and, above all, custom-building as little as possible.” It
likewise described that Foley and his team have “[broken] every rule” to make Peloton a reality.
38. It is a reality that continues to grow and exceed expectations. In its latest
investment round, Peloton raised $550 million at a valuation of $4.15 billion; and on September
26, 2019, Peloton debuted on the NASDAQ stock exchange as a publicly traded company.
Peloton continues to expand both nationally and internationally. Most importantly, Peloton is
doing what it set out to do—allowing more people than ever to participate in high-energy, state-
of-the-art exercise on their own schedule, and empowering members to maximize their most
valuable resource: time.
IV. Peloton Patents Its Intellectual Property
39. After years of investment, risk, and innovation, Peloton has become a leader of
the at-home fitness world. To protect its intellectual property, Foley and the Peloton inventor
team have applied for, and received, patents covering their inventions.
40. United States Patent No. 10,022,590 titled Exercise System and Method, was duly
and lawfully issued on July 17, 2018. A true and correct copy of the ’590 Patent is attached
hereto as Exhibit 1.
41. United States Patent No. 10,322,315 titled Exercise System and Method, was duly
and lawfully issued on June 18, 2019. A true and correct copy of the ’315 Patent is attached
hereto as Exhibit 2.
42. Plaintiff Peloton Interactive, Inc. is the current owner of all rights, title, and
interest in and to the Peloton Patents. Peloton and the Peloton Bike practice the Peloton Patents
because, among other things, the Peloton Bike has a plurality of sensors operable to detect
activity by a first user and generate first user performance parameters; the Peloton Bike further
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includes a local processing system that is operable to: (1) display live and archived cycling
classes, (2) track the first user performance parameters at a particular point in a selected cycling
class, and (3) display at least one first user performance parameter and at least one of a plurality
of second user performance parameters received via a digital communication network from a
second local processing system at a second location such that at least one of the first user
performance parameters at the particular point in the selected cycling class and at least one of the
second user performance parameters at the same point in the selected cycling class are presented
for comparison on a display screen. Peloton thus manufactures and sells a commercial
embodiment of the Peloton Patents, including the Peloton Bike with a subscription to Peloton
classes.
V. The Peloton Patents Recite Inventive Concepts That Were Not Well Understood,
Routine, Or Conventional At The Time
43. As described herein, the Peloton Bike is a revolutionary, category-creating device
that: (1) solved significant problems in the prior art; (2) has experienced immense market
success; (3) has received near-universal market praise; (4) overcame significant technological
hurdles in development; and (5) overcame initial market reservations about its viability. The
Peloton Bike implemented inventive concepts that were not well-understood, routine, or
conventional at the time it was developed. These inventive concepts are incorporated into the
claims of the Peloton Patents. It is the inventive concepts contained in the claims of the Peloton
Patents that account for the Peloton Bike’s leaps-and-bounds improvement over the prior art, as
well as its resulting economic success.
44. For example, Claim 1 of the ’590 Patent describes a system with a user interface
operable to “display live and archived cycling class content to a first user at a first location.”
Similarly, Claims 1 and 11 of the ’315 Patent describe a method comprising displaying or
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providing “information about live and archived exercise classes that can be accessed by a first
user via a digital communication network on a display screen at a first location.” These claim
limitations alone describe an unconventional improvement over the prior art.
45. Prior art cycling classes only allowed users to participate in live classes; they did
not offer any capability for a user to access and participate in archived cycling classes. With
respect to home bikes, on the other hand, it was not well-understood, routine, or conventional to
provide a home bike with networked access to a live cycling class. Nor was it well-understood,
routine, or conventional to provide a home bike with both: (1) networked access to live cycling
classes; and (2) networked access to archived cycling classes.
46. According to Claim 1 of both the ’590 and the ’315 Patents, and Claim 11 of the
’315 Patent, a user can select from one of the available live and archived cycling classes and
receive that selection output to the user’s display screen. This functionality is what allowed one
of the significant advances over the prior art, as described elsewhere in this Complaint. It is this
functionality that allows a user to exercise in the most competitive, interactive way possible,
while also balancing the user’s need for flexible scheduling of his or her workouts.
47. With access to either live or archived classes, the user can, at his or her own
discretion, decide whether it is more important to that user, on a given day, to start a workout at
the instant he or she wants (in which case the user will select an archived class), or whether it is
more important to the user’s motivation to exercise to be able to participate live with other class
participants (in which case the user will select a live class). Offering this flexibility was a major
advancement over both live classes and at-home bikes in existence at that time.
48. Claim 1 of the ’590 Patent also describes tracking performance parameters for the
user, as well as performance parameters for a second, remote user, and presenting “at least one of
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[the] first user performance parameters at the particular point in the selected cycling class and at
least one of the second user performance parameters at the same point in the selected class . . .
for comparison on the display screen at the first location.” Claims 1 and 11 of the ’315 Patent
have a similar limitation. These limitations, which apply whether a user has selected a live or an
archived class, describe an inventive way to give a user, cycling in his or her own home, access
to a motivating feeling of competition with another rider.
49. For a live class, as described in Claim 1 of both Peloton Patents, and Claim 11 of
the ’315 Patent, the user’s performance parameters are presented on the user’s screen along with
at least one performance parameter of another remote user taking the class at the same time,
wherever he or she may be. This functionality—which gives the user the ability to compete in a
live class with another user participating in that same class from anywhere around the globe—
was not well-understood, routine, or conventional at the time of the invention of the Peloton
Patents, and helped solve the “rider boredom” problem set forth elsewhere in this Complaint.
50. For an archived class, as described in both Claims 1, and Claim 11 of the ’315
Patent, at least one performance parameter of another user who has taken the class previously is
time-shifted so that it is presented to the user, together with at least one of the user’s own
performance parameters, for comparison “at the same point in the selected cycling class.” This
functionality—which gives the user the ability to compete in real-time with another user who
participated in that class previously, no matter where or when that other user participated—was
revolutionary at the time, and also helped solve the “rider boredom” problem. In this way, the
system and method described in both Claims 1 offered multiple inventive ways for a user to be
motivated to exercise by competition with a remote user, and was thus an immense improvement
over the prior art.
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51. The dependent claims of the Peloton Patents add additional inventive concepts to
the independent claims that offer further unconventional improvements over the prior art, both
alone and in combination, and result in increased motivation and engagement for riders. For
example, Claim 15 of the ’590 Patent adds the concept of “generating a leaderboard from the
class participant content and the plurality of first user parameters, the leaderboard representing
performance parameters at the same point in the selected cycling class; and displaying the
leaderboard on the display screen at the first location.” Claims 6 and 16 of the ’315 Patent are
similar. Again, this claim language applies whether the user has selected a live or an archived
class. And the idea of having a system that could perform this leaderboard functionality for both
a live and an archived class was revolutionary.
52. As another example, Claim 16 of the ’590 Patent and Claims 7 and 17 of the ’315
Patent claim “class participant content” that “comprises live and archived class participant
content.” These claims add to the underlying claims the additional inventive concept that live
and archived content would appear on the same leaderboard. No other cycling system was
doing this at the time of the invention of the Peloton Patents.
53. As yet another example, Claim 17 of the ’590 Patent, and Claims 7 and 17 of the
’315 Patent, further describe the time-synchronization aspect of the Peloton Patents, and Claim
18 of the ’590 Patent, and Claims 8 and 18 of the ’315 Patent, describe how that aspect can be
implemented: by ensuring that the class participant content “comprises a start signal indicating a
starting point of the cycling class,” and that the “class participant content is synchronized to the
start signal for data comparison.” Once more, these concepts were not well-understood, routine,
or conventional at the time of invention of the Peloton Patents.
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54. Finally, several of the claims of the Peloton Patents describe particular types of
information to be displayed on the user interface, and particular ways in which that information
should be displayed. See ’590 Patent, Claims 6-8, 12-13, 20; ’315 Patent, Claims 3, 10, 13, 20.
These concepts, as well, were not well-understood, routine, or conventional at the time of
invention of the Peloton Patents.
VI. Echelon Infringes With Its Copycat Products
55. Because of Peloton’s success, competitors have brought copycat products to
market that infringe Peloton’s intellectual property. In February 2018, Echelon announced its
intent to launch a product similar to the Peloton Bike, called the Connect bike. The Connect bike
was the precursor to the Smart Connect EX1, EX3, EX5, and EX5s bikes (the “Echelon Bikes”),
which Echelon sells as of the filing of this Complaint.
56. With the Echelon Bikes, Echelon infringes the Peloton Patents by, among other
things, displaying live and archived cycling class content to remote riders, tracking a remote
rider’s performance, and comparing that remote rider’s performance against the performance of
other remote riders. Echelon markets the Echelon Bikes by informing riders that they can “JOIN
US FOR LIVE STUDIO FITNESS FROM THE COMFORT OF HOME.” Echelon further
advertises its “New On Demand content added daily so you can work out where you want, when
you want.”
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Above: Images of the Echelon Bikes and its copycat leaderboard.
57. As of the filing of this Complaint, Echelon makes, uses, sells, and offers for sale
the Echelon Bikes, which infringe the Peloton Patents. The Echelon Bikes, like the Peloton
Bike, allow riders to access live and archived cycling classes from the comfort of home,
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including tracking, synchronizing, and comparing performance metrics of the at-home rider and
other riders.
58. Echelon actively markets and sells the Echelon Bikes to customers across the
United States, including in the District of Delaware.
59. The Echelon Bikes are also available for purchase on Echelon’s website. Echelon
offers to ship the Echelon Bikes to any location in the continental United States and elsewhere,
including the United Kingdom, Canada, and Mexico.
60. Echelon and the Echelon Bikes satisfy each and every limitation of one or more
claims of the ’590 and ’315 Patents.
VII. Echelon’s Blatant Infringement of Peloton’s Famous Trademarks and Trade Dress
61. Echelon has also infringed and continues to infringe on Peloton’s trademark and
trade dress rights.
62. Peloton owns a federal trademark registration for the wordmark “PELOTON”
(U.S. Reg. No. 4,580,888) (“Peloton Mark”) for, among other things, stationary exercise bicycles
and software monitoring and analyzing various parameters associated with the operation of a
bicycle. Peloton also owns a federal trademark registration for the wordmark “P” (U.S. Reg. No.
5,810,590) (“‘P’ Mark”), which comprises a stylized letter “P” represented at an angle and
embedded within a crank-shaft design:
The registrations for the Peloton Mark and “P” Mark are valid and in full force and effect.
22
63. Peloton has devoted significant marketing, advertising, and financial resources
and creative energies towards the Peloton Mark and the stylized “P” Mark. To reinforce the
brand significance of the Peloton name and logo, Peloton’s advertising and promotional efforts
have established a connection in the minds of consumers between the wordmarks and Peloton’s
state-of-the-art, transformative fitness products. As a result of these marketing and creation
efforts, the Peloton Mark and “P” Mark are known nationally and internationally, and are widely
recognized by the consuming public as a designation of source for Peloton Bikes and Peloton
fitness products. Peloton has more than 1.4 million members; and the company has acquired
fame well beyond its userbase such that the Peloton Mark and “P” Mark are well known by the
general public. The Peloton Bike has received near-universal adulation, with Men’s Health
naming it “the best cardio machine on the planet.” Peloton has become the market leader and is
one of the most recognized brands for health and fitness. As a result of extensive advertising, the
state-of-the art quality of the Peloton Bike, and Peloton’s commercial success, the Peloton Mark
and “P” Mark have acquired significant goodwill and secondary meaning among the general
public. The marks are distinctive and famous.
64. Peloton has also spent substantial resources in promoting the Peloton Bike using
the distinctive look and feel of the product stemming from, among other things, the red, white,
and black color scheme; white block lettering of the Peloton Mark; precise character spacing;
location of the stylized “P” Mark; and aesthetic layout of both the Peloton Bike and the graphical
user interface. The combination of these nonfunctional elements and the total stylized
appearance of the Peloton Bike is distinctive and identifies the bike as a Peloton product. In
virtually all of its advertisements, Peloton displays the distinct Peloton Bike and uses the black,
red, and white color scheme with white block lettering and the “P” Mark to the left of the
23
company name. The Peloton website, for example, uses the same color scheme and fonts with
the Peloton Bike and its distinct trade dress prominently featured throughout. Like the Peloton
Mark and “P” Mark, the distinctive Peloton trade dress has acquired significant goodwill and
secondary meaning among the general public. The distinctive look and feel of the Peloton Bike
is known nationally and internationally, and is widely recognized by the consuming public as a
designation of source for Peloton Bikes and Peloton fitness products.
65. Echelon directly competes with Peloton. In order to compete, Echelon
purposefully embarked on an advertising and promotional campaign that uses a confusingly
similar logo and a sound-a-like wordmark, and blatantly copied the distinctive look and feel of
the Peloton Bike. Echelon willfully and intentionally infringed on Peloton’s trademarks and
trade dress in order to lure in and deceive confused customers into initially thinking that the
Echelon Bikes are Peloton Bikes, or that the Echelon Bikes are in some way connected with,
sponsored by, or affiliated with Peloton. Instead of spending resources and developing its own
marketing and distinct look, Echelon chose to free ride on the goodwill and secondary meaning
Peloton has worked tremendously hard to develop. Echelon commenced its unlawful
infringement after the Peloton Mark, “P” Mark, and Peloton Bike trade dress became famous;
indeed, Echelon purposefully sought to benefit from Peloton’s fame and to dilute the goodwill
associated with Peloton’s marks and trade dress.
66. In order to lure in confused customers and trade off the goodwill and reputation
created and maintained by Peloton in the Peloton Mark and “P” Mark, Echelon has used and
continues to use a sound-alike mark and a confusingly similar logo with a stylized letter “E”
represented at an angle, both of which are likely to cause confusion, mistake, or deception in
violation of Section 32(a) of the Lanham Act:
24
Echelon began using its unlawful marks after Peloton and the Peloton Mark and “P” Mark
acquired nationwide fame among the general public. Echelon’s acts described herein constitute
infringement of one or more of Peloton’s federally registered trademarks and have caused, and
will continue to cause, serious irreparable injury to Peloton and to the goodwill associated with
the Peloton Mark and “P” Mark.
67. In addition to use of the unlawful marks, Echelon has purposefully copied the
Peloton Bike’s distinct trade dress in order to lure in and deceive customers. The Echelon Bikes
imitate Peloton down to the placement of the similar round logo to the left of the company name
in white block lettering and its use of a nearly identical red, white, and black color scheme, as
shown below:
Peloton used its trade dress extensively and continuously before Echelon began advertising,
promoting, selling, offering to sell, and distributing its infringing bikes, and the trade dress
acquired fame among the general public before Echelon commenced its unlawful activities.
25
68. The Echelon user interface (shown below, top) also copies the look and feel of the
Peloton classes (shown below, bottom), including but not limited to its use of similar font, font
size, coloring, and layout:
26
69. Echelon’s blatant imitation of Peloton’s trade dress is pervasive. Echelon
purposefully lures in confused customers at every marketing touch point. By using images of the
copycat Echelon bike in advertisements and social media posts, Echelon confuses customers and
generates deceptive initial interest in their products. Echelon targets the same consumers and
uses the same marketing touch points, including a website that is a blatant rip-off of the Peloton
design. This includes, but is not limited to, the website headers, color scheme, font, spacing, and
layout. For example, the website header uses the same logo placement, white block lettering,
spacing, and icon images:
The Echelon website (shown in the images on the left below) even copies exact language from
the Peloton website (shown in the images on the right below). The Peloton website first used the
phrase “Never Ride Alone,” which Echelon now uses in a similar page with an identical view of
the Echelon Bike user interface:
27
And in promoting its membership rates, Echelon uses language identical to the Peloton website.
Peloton first advertised on its website that “[w]ith the Peloton Membership, access every live and
on-demand Peloton class across your devices for $39/month.” Echelon now advertises in similar
font, color, spacing, and design layout that “[w]ith the Echelon Membership, access every live
and on-demand Echelon class across your devices for $39/month,” as shown below:
70. As a result of Echelon’s activities related to the infringing products, there is a
likelihood of confusion, mistake, or deception as to the source, affiliation, connection, or
association of Echelon’s bikes with Peloton, including by hooking customers at the initial point
of contact with the Echelon Bikes.
71. In fact, on August 28, 2019, The New York Times published an article that
recognized Echelon’s products as “a blatant knockoff, down to a round black logo,” of the
28
Peloton Bike.1 The New York Times further reported that Echelon’s Chief Executive Officer
“acknowledged the similarities with Peloton but said Echelon’s models were more affordable.”
And in one recent user comparison of the Echelon product to the Peloton Bike, an individual on
Reddit.com wrote that “[e]ven the [Echelon] product font seems to be a bit of a ripoff of the
peloton font.”
72. As a result of Echelon’s wrongful conduct, Peloton has been damaged and will
continue to be damaged in an amount to be determined at trial. Among other harms, Echelon’s
unlawful activities have diluted and continue to dilute Peloton’s famous trademarks and trade
dress by associating Peloton’s famous trademarks and trade dress with Echelon’s products of
inferior quality, and by impairing the distinctiveness of Peloton’s famous trademarks and trade
dress.
VIII. Echelon’s Campaign of False Advertising and Unfair Competition
73. After capturing confused customers with their unlawful activities, Echelon
engages in a false advertising campaign to further undercut Peloton’s customer base. Echelon
disseminated false and misleading information about the Echelon Bikes and the Peloton Bike
throughout the country, including by misleading customers about the price of the parties’
products, misrepresenting the breadth of Peloton’s class content, and deflating the number of
instructors Peloton has while inflating Echelon’s own trainer base. As a result, Echelon unfairly
stole customers from Peloton and attracted funding from investment firms that reportedly
brought Echelon’s total valuation to over $100 million.
74. By way of example, Echelon has presented a page on its website (see
https://web.archive.org/web/20190808215116/https://echelonfit.com/pages/compare-the-ex3-
1
See https://www.nytimes.com/2019/08/28/technology/peloton-ipo.html.
29
and-peloton/) that purports to compare the Echelon Smart Connect EX3 Max Bike with the
Peloton Bike. A portion of that website is reproduced below:
75. That page, which Echelon has presented at that URL since at least as early as
August 1, 2019 – and, on information and belief, far longer – contains numerous false and
misleading statements about the Echelon and Peloton Bikes.
76. For example, Echelon’s purported price comparison misleads customers by
claiming that Peloton’s “Bike Price” is $1,995, while Echelon’s “Bike Price” is $999. In fact,
Peloton’s “Bike Price” includes the actual bike and a display, while Echelon’s stated “Bike
Price” includes only the actual bike – customers are forced to use their own display device at a
30
cost of hundreds of additional dollars, or to pay anywhere from $1,639.98 to $2,199 for a version
of the Echelon Bike that includes a touchscreen.
77. Echelon’s own customer reviews show disappointment in Echelon’s deceptive
advertising:
78. As another example, Echelon misrepresents that Peloton’s workouts are limited to
“‘After The Ride’ + Cross Training Workouts” while Echelon purportedly provides “‘FitPass’
featuring trainer-led yoga, stretching, pre-and-post workout sessions, meditations, pilates,
kickboxing, Zumba and more.” In truth, Peloton workouts also include instructor-led yoga,
stretching, pre- and post-workout content, meditation, bootcamp, indoor and outdoor running and
walking, and more. Indeed, all Peloton members are provided with access to the Peloton Digital
app, which includes a full suite of workouts across ten fitness disciplines.
79. As yet another example, Echelon falsely claims that Peloton only has 12
instructors; in fact, Peloton has 29 and counting. Echelon also falsely claims that it has over 30
trainers; in fact, its website lists only 17 total trainers across all disciplines.
80. By way of another example, Echelon has presented a post on its Facebook page
that purports to compare the Echelon Smart Connect EX3 Max Bike with the Peloton Bike. A
portion of that post is reproduced below:
31
81. That page, which Echelon presented on Facebook since at least as early as
February 18, 2019, contains numerous false and misleading statements about the Echelon and
Peloton Bikes.
82. For example, Echelon misrepresents the price of Peloton’s product by claiming
the bike is $2,245 and shipping and assembly is $250. In fact, the $2,245 price includes the
Peloton Bike, display, and is inclusive of shipping and assembly. Echelon, meanwhile, charges
extra for both shipping and assembly. Moreover, Echelon falsely claims that the price of
Peloton’s subscription is “$39/mo for annual sub.” when in fact the pricing is $39 per month
regardless of the length of subscription and with no minimum commitment.
83. As described above, Echelon also misrepresents that Peloton’s workouts are
limited to “‘After The Ride’ + Cross Training Workouts.” In truth, Peloton workouts also
32
include instructor-led yoga, stretching, pre- and post-workout content, meditation, bootcamp,
indoor and outdoor running and walking, and more. Indeed, all Peloton members are provided
with access to the Peloton Digital app, which includes a full suite of workouts.
COUNT I
(Infringement of the ’590 Patent)
84. Peloton incorporates all other allegations in this Complaint.
85. Peloton is the owner of all rights, title, and interest in the ’590 Patent. The ’590
Patent issued on July 17, 2018.
86. The ’590 Patent is valid and enforceable.
87. In violation of 35 U.S.C. § 271(a), Defendant Echelon makes, uses, offers to sell,
and sells the Echelon Bikes and thereby directly infringes the ’590 Patent. Echelon and the
Echelon Bikes satisfy each and every limitation of one or more claims of the ’590 Patent.
Echelon thereby directly infringes one or more claims of the ’590 Patent.
88. In violation of 35 U.S.C. § 271(b), Defendant Echelon advertises to, sells to,
encourages, and instructs third parties, including Echelon customers, to use the Echelon Bikes.
Echelon thereby induces infringement of one or more claims of the ’590 Patent, by having the
specific intent to induce its customers to infringe the ’590 Patent, despite knowledge that its
customers’ acts infringe the ’590 Patent.
89. In violation of 35 U.S.C. § 271(c), Defendant Echelon offers to sell and sells
material components of the ’590 Patent that have no substantial non-infringing use and constitute
a material part of the invention, to third parties including Echelon’s customers. Echelon has
thereby contributorily infringed and continues to contributorily infringe one or more of the
claims of the ’590 Patent, despite its knowledge that material components are especially made or
33
especially adapted for use in an infringement of the ’590 Patent, and not a staple article or
commodity of commerce suitable for substantial non-infringing use.
90. Echelon’s ongoing infringement is willful with notice of the ’590 Patent and its
infringement as of the filing of this Complaint.
91. Peloton has suffered and continues to suffer damages and irreparable harm
because of Defendant Echelon’s past and ongoing infringement.
92. Unless Defendant Echelon’s infringement is enjoined, Peloton will continue to be
damaged and irreparably harmed.
93. Peloton meets the criteria for, and is entitled to, temporary, preliminary, and
permanent injunctive relief.
COUNT II
(Infringement of the ’315 Patent)
95. Peloton is the owner of all rights, title, and interest in the ’315 Patent. The ’315
Patent issued on June 18, 2019.
96. The ’315 Patent is valid and enforceable.
97. In violation of 35 U.S.C. § 271(a), Defendant Echelon makes, uses, offers to sell,
and sells the Echelon Bikes and thereby directly infringes the ’315 Patent. Echelon and the
Echelon Bikes satisfy each and every limitation of one or more claims of the ’315 Patent.
Echelon thereby directly infringes one or more claims of the ’315 Patent.
98. In violation of 35 U.S.C. § 271(b), Defendant Echelon advertises to, sells to,
encourages, and instructs third parties, including Echelon customers, to use the Echelon Bikes.
Echelon thereby induces infringement of one or more claims of the ’315 Patent, by having the
34
specific intent to induce its customers to infringe the ’315 Patent, despite knowledge that its
customers’ acts infringe the ’315 Patent.
99. In violation of 35 U.S.C. § 271(c), Defendant Echelon offers to sell and sells
material components of the ’315 Patent that have no substantial non-infringing use and constitute
a material part of the invention, to third parties including Echelon’s customers. Echelon has
thereby contributorily infringed and continues to contributorily infringe one or more of the
claims of the ’315 Patent, despite its knowledge that material components are especially made or
especially adapted for use in an infringement of the ’315 Patent, and not a staple article or
commodity of commerce suitable for substantial non-infringing use.
100. Defendant Echelon’s ongoing infringement is willful with notice of the ’315
Patent and its infringement as of the filing of this Complaint.
101. Peloton has suffered and continues to suffer damages and irreparable harm
because of Defendant Echelon’s past and ongoing infringement.
102. Unless Defendant Echelon’s infringement is enjoined, Peloton will continue to be
damaged and irreparably harmed.
103. Peloton meets the criteria for, and is entitled to, temporary, preliminary, and
permanent injunctive relief.
COUNT III
(Trademark Infringement in Violation of Section 32(1) of the Lanham Act)
105. Peloton is owner of the federally registered Peloton Mark and federally registered
“P” Mark, which Peloton uses in connection with the promotion and sale of state-of-the-art
35
fitness products. The registrations for the Peloton Mark and “P” Marks are valid and in full force
and effect.
106. Echelon directly competes with Peloton and has intentionally, knowingly,
deliberately, and willfully infringed and continues to intentionally, knowingly, deliberately, and
willfully infringe on the Peloton Mark and the “P” Mark in connection with the sale of the
Echelon Bikes. Echelon intentionally, knowingly, deliberately, and willfully uses in commerce
marks and logos that are likely to cause confusion, mistake, or deception in violation of Section
32 of the Lanham Act. Echelon intended to use marks likely to cause confusion among the
consuming public in order to lure in and deceive customers into thinking their similar product is
a Peloton Bike or is otherwise affiliated with, sponsored by, or connected with Peloton. Echelon
targets the same customers as Peloton through similar marketing channels.
107. As a direct and proximate cause of the infringing acts, Peloton has been damaged
in an amount to be determined at trial. Peloton has suffered and continues to suffer immediate
and irreparable injury for which it has no adequate remedy at law. Peloton is entitled to
injunctive relief and up to three times its actual damages and/or an award of Defendant
Echelon’s profits, as well as costs and Peloton’s reasonable attorneys’ fees under 15 U.S.C.
§§ 1116–17.
COUNT IV
(Trade Dress Infringement in Violation of Section 43(a) of the Lanham Act)
109. The Peloton Bike has a distinctive look and feel stemming from, among other
things, the red, white and black color scheme, white block lettering of the Peloton Mark, precise
character spacing, location of the stylized round “P” Mark, and aesthetic layout of both the
36
Peloton Bike and the graphical user interface. Purchasers of the Peloton Bike associate this
distinctive appearance and overall feel with Peloton. The combination of these nonfunctional
elements, among others, and the total impression of the Peloton Bike is sufficiently distinctive
that this trade dress identifies Peloton as the source of the Peloton Bike. Peloton has also
extensively advertised the Peloton Bike. Through that extensive and continuous use and
promotion, the Peloton Bike’s trade dress has become a well-known indicator of the origin and
state-of-the-art quality of Peloton Bikes and has acquired secondary meaning. The distinct trade
dress acquired secondary meaning before Echelon commenced its unlawful infringement.
110. Echelon has intentionally, knowingly, deliberately, and willfully infringed and
continues to intentionally, knowingly, deliberately, and willfully infringe on Peloton’s trade
dress rights through its blatant imitation of the Peloton Bike in interstate commerce. This
includes, but is not limited to, the use of the same color scheme, white block lettering, location of
the similar marks on the bike frame, and aesthetic layout of the Echelon Bike and the graphic
user interface (which uses the similar fonts, color, and layout). Echelon’s copycat products are
likely to cause confusion, mistake, or deception as to the source, affiliation, connection, or
association of Echelon’s bikes with Peloton. This includes the confusion, mistake, or deception
that creates initial customer interest in the Echelon Bikes.
111. As a result of Echelon’s infringement of Peloton’s trade dress, Peloton has
suffered substantial damages, as well as the continuing loss of the goodwill and reputation
established by Peloton in its trade dress. Peloton has suffered and continues to suffer immediate
and irreparable injury for which it has no adequate remedy at law. Peloton is entitled to
injunctive relief and up to three times its actual damages and/or an award of Defendant
37
Echelon’s profits, as well as costs and Peloton’s reasonable attorneys’ fees under 15 U.S.C.
§§ 1116–17.
COUNT V
(Trademark and Trade Dress Dilution in Violation of Section 43(c) of the Lanham Act)
113. The Peloton Mark, “P” Mark, and Pelton Bike trade dress are famous and entitled
to protection under Section 43(c) of the Lanham Act. Each of the Peloton Mark, “P” Mark, and
Peloton Bike trade dress is widely recognized by the general consuming public of the United
States as a designation of the source of Peloton and Peloton’s state-of-the-art health and fitness
products. Through extensive and continuous advertising and promotion, the Peloton Mark, “P”
Mark, and Peloton Bike trade dress acquired fame nationwide among the general public and
acquired secondary meaning before Echelon commenced its unlawful use of Peloton’s trade
dress and unlawful marks in connection with the infringing Echelon Bikes.
114. Due to Echelon’s willful and knowing unlawful conduct, Echelon is likely to
dilute, has diluted, and continues to dilute Peloton’s marks and trade dress by and not limited to
blurring the public’s exclusive association of Peloton’s famous marks and trade dress with
Peloton’s products, by lessening the capacity of Peloton’s famous marks and trade dress to
distinguish Peloton’s products, and by associating Peloton’s famous marks and trade dress with
lesser quality Echelon Bikes.
suffered substantial damages, as well as the continuing loss of the goodwill and reputation.
Peloton has suffered and continues to suffer immediate and irreparable injury for which it has no
adequate remedy at law. Peloton is entitled to injunctive relief and actual damages and/or an
38
award of Defendant Echelon’s profits, as well as costs and Peloton’s reasonable attorneys’ fees
under 15 U.S.C. §§ 1116–17.
COUNT VI
(Trademark and Trade Dress Dilution in Violation of DTA, 6 Del. Code § 3313, et seq.)
117. The Peloton Mark, “P” Mark, and Pelton Bike trade dress are famous and entitled
to protection under the Delaware Trademark Act. Each of the Peloton Mark, “P” Mark, and
Peloton Bike trade dress is widely recognized by the general consuming public of the United
States as a designation of the source of Peloton and Peloton’s state-of-the-art health and fitness
products. Through extensive and continuous advertising and promotion, the Peloton Mark, “P”
Mark, and Peloton Bike trade dress acquired fame nationwide among the general public and
acquired secondary meaning before Echelon commenced its unlawful use of Peloton’s trade
dress and unlawful marks in connection with the infringing Echelon Bikes.
118. Due to Echelon’s willful and knowing unlawful conduct, Echelon is likely to
dilute, has diluted, and continues to dilute Peloton’s marks and trade dress by and not limited to
blurring the public’s exclusive association of Peloton’s famous marks and trade dress with
Peloton’s products, by lessening the capacity of Peloton’s famous marks and trade dress to
distinguish Peloton’s products, and by associating Peloton’s famous marks and trade dress with
lesser quality Echelon Bikes.
suffered substantial damages, as well as the continuing loss of the goodwill and reputation.
Peloton has suffered and continues to suffer immediate and irreparable injury for which it has no
39
adequate remedy at law. Peloton will continue to suffer irreparable harm unless this Court
enjoins Echelon’s conduct.
COUNT VII
(False Advertising in Violation of Section 43(a) of the Lanham Act)
121. After intentionally luring in customers with its unlawful marks and trade dress,
Defendant Echelon has made literally false and misleading statements of fact about both
Echelon’s and Peloton’s products in violation of 15 U.S.C. § 1125(a). Those statements
misrepresent the nature, characteristics, and/or qualities of Echelon and Peloton and are
expressly false, impliedly false, or both. Echelon has misrepresented the pricing of the parties’
products. For instance, Echelon misrepresents the price of Peloton’s product by claiming the
bike is $2,245 and shipping and assembly is $250. In fact, the $2,245 price includes the Peloton
Bike, display, and is inclusive of shipping and assembly. Moreover, Echelon falsely claims that
the price of Peloton’s subscription is “$39/mo for annual sub.” when in fact the pricing is $39 per
month regardless of the length of subscription and with no minimum commitment. Echelon also
misrepresents the parties’ product offerings, falsely claiming that Peloton’s workouts are limited
to “‘After The Ride’ + Cross Training Workouts” and that Peloton only has 12 instructors while
Echelon has over 30—Peloton actually has 29, while Echelon has only 17 trainers featured on its
website.
122. Defendant Echelon has knowingly induced and/or caused third parties—including
customers that read Echelon’s false advertisements—to engage in additional acts of false
advertising by repeating Echelon’s false statements.
40
123. Defendant Echelon knew or should have known that its advertising was false,
misleading, and deceptive.
124. Defendant Echelon’s false and misleading statements have deceived and have the
tendency to deceive a substantial segment of its intended audience about matters material to
purchasing decisions. Echelon’s violations have caused harm to the public and, unless restrained,
will further damage the public.
125. Peloton’s and Defendant Echelon’s products are offered in interstate commerce.
Similarly, Echelon’s false and misleading statements were and are made in commercial
advertising and promotion in interstate commerce.
126. Defendant Echelon’s violations have proximately harmed Peloton. As a result of
Echelon’s violations, Peloton has suffered and will continue to suffer damage to its business and
goodwill. Peloton has lost and will continue to lose sales and profits and incur increased
advertising and marketing costs.
127. Peloton’s immediate, irreparable injuries have no adequate remedy at law, and
Peloton is entitled to injunctive relief and up to three times its actual damages and/or an award of
Defendant Echelon’s profits, as well as costs and Peloton’s reasonable attorneys’ fees under 15
U.S.C. §§ 1116–17.
COUNT VIII
(Violation of Delaware Common Law – Trade Libel)
129. Defendant Echelon has made false and misleading statements of fact about both
Echelon’s and Peloton’s products. Those statements misrepresent the nature, characteristics,
and/or qualities of Echelon and Peloton and are expressly false, impliedly false, or both. As
41
explained above, Echelon has misrepresented the pricing of the parties’ products. For instance,
Echelon misrepresents the price of Peloton’s product by claiming the bike is $2,245 and shipping
and assembly is $250. In fact, the $2,245 price includes the Peloton Bike, display, and is
inclusive of shipping and assembly. Moreover, Echelon falsely claims that the price of Peloton’s
subscription is “$39/mo for annual sub.” when in fact the pricing is $39 per month regardless of
the length of subscription and with no minimum commitment. Echelon also misrepresents the
parties’ product offerings, falsely claiming that Peloton’s workouts are limited to “‘After The
Ride’ + Cross Training Workouts” and that Peloton only has 12 instructors while Echelon has
over 30—Peloton actually has 29, while Echelon has only 17 trainers featured on its website.
130. Defendant Echelon has knowingly induced and/or caused third parties—including
customers that read Echelon’s false advertisements—to engage in additional acts of false
advertising by repeating Echelon’s false statements.
purchasing decisions. Echelon’s violations have caused harm to the public and, unless restrained,
will further damage the public.
goodwill. Peloton has and will lose sales and profits and incur increased advertising and
marketing costs.
42
134. Defendant Echelon has acted with oppression, fraud, or malice, entitling Peloton
to an award of punitive damages.
135. Defendant Echelon has acted willfully, in bad faith, and with malice. Unless
restrained, Echelon will continue to cause further irreparable competitive and commercial injury
to Peloton.
Peloton is entitled to injunctive relief and up to three times its actual damages and/or an award of
Defendant Echelon’s profits, as well as costs and Peloton’s reasonable attorneys’ fees.
COUNT IV
(Violation of Delaware Deceptive Trade Practices Act 6 Del. Code § 2531, et seq.)
138. Defendant Echelon has made false and misleading statements of fact about both
Echelon and Peloton’s products. Those statements misrepresent the nature, characteristics, and/or
qualities of Echelon and Peloton and are expressly false, impliedly false, or both. As explained
above, Echelon misrepresents the price of Peloton’s product by claiming the bike is $2,245 and
shipping and assembly is $250. In fact, the $2,245 price includes the Peloton Bike, display, and
is inclusive of shipping and assembly. Moreover, Echelon falsely claims that the price of
Peloton’s subscription is “$39/mo for annual sub.” when in fact the pricing is $39 per month
regardless of the length of subscription and with no minimum commitment. Echelon also
misrepresents the parties’ product offerings, falsely claiming that Peloton’s workouts are limited
to “‘After The Ride’ + Cross Training Workouts” and that Peloton only has 12 instructors while
Echelon has over 30—Peloton actually has 29, while Echelon has only 17 trainers featured on its
website.
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139. Echelon’s false and misleading statements constitute unfair deceptive trade
practices in violation of the Delaware Deceptive Trade Practices Act 6 Del. Code § 2531, et seq.,
and specifically including, for example, § 2532(a)(5), (8), and (12).
purchasing decisions. Echelon’s violations have caused harm to the public and, unless
restrained, will further damage the public.
142. Peloton’s and Defendant Echelon’s products are offered in interstate commerce.
Similarly, Echelon’s false and misleading statements were and are made in commercial
advertising and promotion in interstate commerce.
goodwill. Peloton has lost and will continue to lose sales and profits and incur increased
advertising and marketing costs.
Peloton is entitled to injunctive relief. On information and belief, Echelon has willfully engaged
in its deceptive trade practices and Peloton is entitled to costs and reasonable attorneys’ fees
pursuant to 6 Del. Code § 2533(b). In addition, pursuant to 6 Del. Code § 2533(c), Peloton is
entitled to treble the amount of its actual damages for Echelon’s violations of Delaware common
law and other statutes.
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PRAYER FOR RELIEF
WHEREFORE, Peloton respectfully asks that the Court enter judgment against
Defendant Echelon as follows:
145. That Defendant Echelon has infringed (either literally or under the doctrine of
equivalents) directly, jointly, and/or indirectly by way of practicing, inducing or contributing to
the infringement of one or more claims of the Peloton Patents;
146. For temporary, preliminary, and permanent injunctive relief enjoining Defendant
Echelon and its officers, directors, agents, affiliates, employees, divisions, branches, subsidiaries,
parents, and all others acting in active concert or participation with it, from infringement,
inducing the infringement, or contributing to the infringement of the Peloton Patents;
147. For an award to Peloton for its damages, costs, expenses, and pre-judgment and
post-judgment interest for Defendant Echelon’s infringement of the Peloton Patents;
148. For an award to Peloton for enhanced damages equal to treble the amount of
actual damages, for the willful nature of Defendant Echelon’s acts of infringement as to the
Peloton Patents, with notice being made at least as early as the filing of this Complaint;
149. That Defendant Echelon has violated federal and state law in engaging in unfair
competition, false advertising, trade libel, trademark infringement, trade dress infringement,
trademark and trade dress dilution, and deceptive trade practices;
150. For temporary, preliminary, and permanent injunctive relief enjoining Defendant
Echelon and its officers, directors, agents, affiliates, employees, divisions, branches, subsidiaries,
parents, and all others acting in active concert or participation with it, from engaging in further
acts of unfair competition, false advertising, trademark infringement, trade dress infringement,
trademark and trade dress dilution, and deceptive trade practices;
45
151. For an award to Peloton for its damages, costs, expenses, and pre-judgment and
post-judgment interest for Defendant Echelon’s unlawful acts of unfair competition, false
advertising, trade libel, trademark infringement, trade dress infringement, trademark and trade
dress dilution, and deceptive trade practices;
152. For an award to Peloton for profits earned by Defendant Echelon attributable to
its unlawful acts of unfair competition, false advertising, trade libel, trademark infringement,
trade dress infringement, trademark and trade dress dilution, and deceptive trade practices;
153. A declaration that this is an “exceptional case” due to the willful nature of
Defendant Echelon’s false advertising, trademark infringement, trade dress infringement, and
trademark and trade dress dilution, and awarding damages and attorneys’ fees and costs to
Peloton pursuant to 15 U.S.C. § 1117, and any other damages including treble damages and
attorneys’ fees to the full extent allowable under the law;
154. Reasonable attorneys’ fees and costs against Defendant Echelon; and
155. For any and all other relief to which Peloton may show itself to be entitled.
JURY DEMAND
Plaintiff demands a trial by jury for all issues so triable.
46
HUESTON HENNIGAN LLP MORRIS, NICHOLS, ARSHT & TUNNELL LLP

Steven N. Feldman
Christina V. Rayburn /s/ Michael J. Flynn
Karen Younkins
Kevin X. Wang Michael J. Flynn (#5333)
Maxwell K. Coll 1201 North Market Street
523 West Sixth Street, Suite 400 P.O. Box 1347
Los Angeles, CA 90014 Wilmington, DE 19899-1347
(213) 788-7272 (302) 658-9200
[email protected]
Counsel for Plaintiff Peloton Interactive, Inc.
October 8, 2019
47
Case 1:19-cv-01903-UNA Document 1-1 Filed 10/08/19 Page 1 of 30 PageID #: 48
EXHIBIT 1
EXHIBIT 2
JS 44 (Rev. 06/17) CIVIL COVER SHEET
The JS 44 civil cover sheet and the information contained herein neither replace nor supplement the filing and service of pleadings or other papers as required by law, except as
provided by local rules of court. This form, approved by the Judicial Conference of the United States in September 1974, is required for the use of the Clerk of Court for the
purpose of initiating the civil docket sheet. (SEE INSTRUCTIONS ON NEXT PAGE OF THIS FORM.)
I. (a) PLAINTIFFS DEFENDANTS

PELOTON INTERACTIVE, INC. ECHELON FITNESS, LLC
(b) County of Residence of First Listed Plaintiff County of Residence of First Listed Defendant
(EXCEPT IN U.S. PLAINTIFF CASES) (IN U.S. PLAINTIFF CASES ONLY)
NOTE: IN LAND CONDEMNATION CASES, USE THE LOCATION OF
THE TRACT OF LAND INVOLVED.
(c) Attorneys (Firm Name, Address, and Telephone Number) Attorneys (If Known)
Michael J. Flynn, Esquire; Morris, Nichols, Arsht & Tunnell LLP
1201 North Market Street, Wilmington, DE 19801
(302) 658-9200
II. BASIS OF JURISDICTION (Place an “X” in One Box Only) III. CITIZENSHIP OF PRINCIPAL PARTIES (Place an “X” in One Box for Plaintiff
(For Diversity Cases Only) and One Box for Defendant)
u 1 U.S. Government u 3 Federal Question PTF DEF PTF DEF
Plaintiff (U.S. Government Not a Party) Citizen of This State u 1 u 1 Incorporated or Principal Place u 4 u 4
of Business In This State
u 2 U.S. Government u 4 Diversity Citizen of Another State u 2 u 2 Incorporated and Principal Place u 5 u 5
Defendant (Indicate Citizenship of Parties in Item III) of Business In Another State
Citizen or Subject of a u 3 u 3 Foreign Nation u 6 u 6

Foreign Country
IV. NATURE OF SUIT (Place an “X” in One Box Only) Click here for: Nature of Suit Code Descriptions.
CONTRACT TORTS FORFEITURE/PENALTY BANKRUPTCY OTHER STATUTES
u 110 Insurance PERSONAL INJURY PERSONAL INJURY u 625 Drug Related Seizure u 422 Appeal 28 USC 158 u 375 False Claims Act
u 120 Marine u 310 Airplane u 365 Personal Injury - of Property 21 USC 881 u 423 Withdrawal u 376 Qui Tam (31 USC
u 130 Miller Act u 315 Airplane Product Product Liability u 690 Other 28 USC 157 3729(a))
u 140 Negotiable Instrument Liability u 367 Health Care/ u 400 State Reapportionment
u 150 Recovery of Overpayment u 320 Assault, Libel & Pharmaceutical PROPERTY RIGHTS u 410 Antitrust
& Enforcement of Judgment Slander Personal Injury u 820 Copyrights u 430 Banks and Banking
u 151 Medicare Act u 330 Federal Employers’ Product Liability u 830 Patent u 450 Commerce
u 152 Recovery of Defaulted Liability u 368 Asbestos Personal u 835 Patent - Abbreviated u 460 Deportation
Student Loans u 340 Marine Injury Product New Drug Application u 470 Racketeer Influenced and
(Excludes Veterans) u 345 Marine Product Liability u 840 Trademark Corrupt Organizations
u 153 Recovery of Overpayment Liability PERSONAL PROPERTY LABOR SOCIAL SECURITY u 480 Consumer Credit
of Veteran’s Benefits u 350 Motor Vehicle u 370 Other Fraud u 710 Fair Labor Standards u 861 HIA (1395ff) u 490 Cable/Sat TV
u 160 Stockholders’ Suits u 355 Motor Vehicle u 371 Truth in Lending Act u 862 Black Lung (923) u 850 Securities/Commodities/
u 190 Other Contract Product Liability u 380 Other Personal u 720 Labor/Management u 863 DIWC/DIWW (405(g)) Exchange
u 195 Contract Product Liability u 360 Other Personal Property Damage Relations u 864 SSID Title XVI u 890 Other Statutory Actions
u 196 Franchise Injury u 385 Property Damage u 740 Railway Labor Act u 865 RSI (405(g)) u 891 Agricultural Acts
u 362 Personal Injury - Product Liability u 751 Family and Medical u 893 Environmental Matters
Medical Malpractice Leave Act u 895 Freedom of Information
REAL PROPERTY CIVIL RIGHTS PRISONER PETITIONS u 790 Other Labor Litigation FEDERAL TAX SUITS Act
u 210 Land Condemnation u 440 Other Civil Rights Habeas Corpus: u 791 Employee Retirement u 870 Taxes (U.S. Plaintiff u 896 Arbitration
u 220 Foreclosure u 441 Voting u 463 Alien Detainee Income Security Act or Defendant) u 899 Administrative Procedure
u 230 Rent Lease & Ejectment u 442 Employment u 510 Motions to Vacate u 871 IRS—Third Party Act/Review or Appeal of
u 240 Torts to Land u 443 Housing/ Sentence 26 USC 7609 Agency Decision
u 245 Tort Product Liability Accommodations u 530 General u 950 Constitutionality of
u 290 All Other Real Property u 445 Amer. w/Disabilities - u 535 Death Penalty IMMIGRATION State Statutes
Employment Other: u 462 Naturalization Application
u 446 Amer. w/Disabilities - u 540 Mandamus & Other u 465 Other Immigration
Other u 550 Civil Rights Actions
u 448 Education u 555 Prison Condition
u 560 Civil Detainee -
Conditions of
Confinement
V. ORIGIN (Place an “X” in One Box Only)
u 1 Original u 2 Removed from u 3 Remanded from u 4 Reinstated or u 5 Transferred from u 6 Multidistrict u 8 Multidistrict
Proceeding State Court Appellate Court Reopened Another District Litigation - Litigation -
(specify) Transfer Direct File
Cite the U.S. Civil Statute under which you are filing (Do not cite jurisdictional statutes unless diversity):
35 U.S.C. §1 et seq. and 15 U.S.C. § 1125
VI. CAUSE OF ACTION Brief description of cause:
Patent Infringement; Trademark Infringement
VII. REQUESTED IN u CHECK IF THIS IS A CLASS ACTION DEMAND $ CHECK YES only if demanded in complaint:
COMPLAINT: UNDER RULE 23, F.R.Cv.P. JURY DEMAND: u Yes u No
VIII. RELATED CASE(S)
(See instructions):
IF ANY JUDGE DOCKET NUMBER
DATE SIGNATURE OF ATTORNEY OF RECORD
10/08/2019 /s/ Michael J. Flynn
FOR OFFICE USE ONLY
RECEIPT # AMOUNT APPLYING IFP JUDGE MAG. JUDGE

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Case 1:19-cv-01903-UNA Document 1 Filed 10/08/19 Page 1 of 47 PageID #: 1

IN THE UNITED STATES DISTRICT COURT

PELOTON INTERACTIVE, INC., )

COMPLAINT FOR PATENT INFRINGEMENT,

Fitness, LLC (“Echelon”), and alleges as follows:

SUMMARY OF THE ACTION

earned more than $900 million in revenue in fiscal year 2019.

2. With Peloton’s hard-fought success, competitors, including Defendant Echelon,

knockoff” of Peloton’s, right “down to a round black logo.”

graphical user interface.

4. Echelon has also unlawfully engaged in a false advertising campaign in an effort

hundreds of additional dollars. Echelon misleads customers by comparing deceptive price

false and misleading advertisements.

5. Echelon also misrepresents to consumers that Peloton’s workouts are limited to

featuring trainer-led yoga, stretching, pre-and-post workout sessions, meditations, pilates,

while Echelon has only 17 trainers featured on its website.

6. Through its false advertising campaign, Echelon has engaged in unfair

Echelon’s total valuation to over $100 million.

dilution, trade libel, false advertising, and deceptive business practices.

New York, 10001.

Street, Chattanooga, Tennessee, 37402.

JURISDICTION AND VENUE

federal claims furthers the interest of judicial economy.

traditional notions of fair play and substantial justice.

and deceptive trade practices within the State of Delaware.

I. Disrupting the Fitness Category

of their own homes.

their own schedule.

Above: The Peloton Bike

Above: The Peloton Graphical User Interface and Leaderboard

cycling classes as well as other exercise content.

II. The Journey to Inventing the Peloton Bike

at home, at any time.

leaders who shared his vision.

as Peloton’s Chief Operating Officer.

years with minimal maintenance.

bike and tablet.

iterative process to develop a successful hardware-software integration.

The Peloton Bike’s software and tablet evolution:

Testing the software with an early version of Peloton Bike:

finally had a prototype in hand to show investors.

Peloton Bike simply was not viable.

III. Bringing Peloton to Market

spread, sales began to pick up.

valuable resource: time.

IV. Peloton Patents Its Intellectual Property

43. As described herein, the Peloton Bike is a revolutionary, category-creating device

well as its resulting economic success.

limitations alone describe an unconventional improvement over the prior art.

classes; and (2) networked access to archived cycling classes.

to a motivating feeling of competition with another rider.

over the prior art.

a live and an archived class was revolutionary.

doing this at the time of the invention of the Peloton Patents.

or conventional at the time of invention of the Peloton Patents.

invention of the Peloton Patents.

VI. Echelon Infringes With Its Copycat Products

55. Because of Peloton’s success, competitors have brought copycat products to

which Echelon sells as of the filing of this Complaint.