Last week was a bad week to be Mike Sinyard, founder and CEO of Specialized bikes.
A week ago Saturday, the Calgary Herald published a story stating that the bicycle manufacturer had threatened a local bike shop in Cochrane, Alberta. According to the article, Specialized sent a letter to Dan Richter demanding that he change the name of his shop, Café Roubaix, because it infringed on Specialized’s trademark of the word Roubaix. The U.S. company markets its best-known line of endurance road bikes under that name.
Within the hour the story erupted on Twitter. By the time Sinyard returned from his weekly Saturday ride, cycling news sites had latched onto the story, too. “I saw the story on Cyclingnews and thought, ‘What’s this?’ It was the first time I knew anything about it,” Sinyard says. “I called our outside attorney but couldn’t reach him. And I just decided it could wait till Monday.”
But by Sunday, the news stories had spurred a groundswell of responses and blogs denouncing Specialized for its heavy-handed tactics. On Monday, the Herald reported on the surge of online support for Café Roubaix, casting the dispute as a David and Goliath-style conflict. Richter said the “Likes” on his Facebook page leapt from 500 to over 15,000. “We were in discussions and working on a settlement before the media coverage,” he said. “Definitely the social media explosion helped swing it our way.”
“Quite honestly, I just feel badly that this thing has gotten to where it has,” Sinyard told me. “When I went up there and met Dan Richter, I realized what a mistake we had made. He’s the kind of guy that I would have as a friend and ride with.”
This isn’t the first time Specialized has tangled over intellectual property. In 2012, the company took on ex-employees Robert Choi and Barley Forsman after the pair left Specialized and started the bike brand Volagi. The judge threw out eight of the nine counts brought by Specialized, including the claim that Choi and Forsman had used trade secrets from their time at Specialized to create their disc-equipped Liscio road bike. The court did rule in Specialized’s favor on one count—that Choi had breached his contract—and the jury awarded Specialized a settlement of $1.
In 2011, the Portland, Oregon-based wheel-building company, Epic Wheel Works, changed its name after Specialized threatened to enforce its trademark rights for its “Epic” brand of bikes. Specialized also threatened Portland-based Mountain Cycle with litigation back in 2006 because it felt the brand’s Stumptown cyclocross bike was too similar to its own Stumpjumper.
As the controversy over Café Roubaix grew, the message boards filled up with testimonies to other past examples. And by Tuesday, the mainstream media began picking up on the story, including a spot on Public Radio International with the titillating headline, “Why would Specialized Bicycle Go After An Afghan War Veteran’s Bike Shop?” Is it germane to the story that Dan Richter is a war veteran? Not really, but the headline effectively portrayed Richter as David in this battle against Goliath.
Worse still for Specialized, Bicycle Retailer reported that Advanced Sports International (ASI), owner of Fuji, Kestrel, Breezer, and SE Bikes, actually owns the worldwide rights to the Roubaix trademark, which they license to Specialized. ASI President and CEO Pat Cunnane said that not only could Richter keep his café name but that Specialized had overstepped its licensing agreement when it registered for the Roubaix trademark in Canada.
The news was like gasoline to the online fire. One well-known columnist wrote an open letter to Mike Sinyard, with fairly clear-sighted commentary. But much of the discourse wasn’t as collected. Everyone suddenly seemed to be an intellectual-property-law expert. Armchair pundits began calling for a boycott on Specialized products. Someone even set up an Indiegogo campaign to fund Café Roubaix’s legal fees.
But it’s crucial to remember the facts. First, ASI owns the trademark for the word Roubaix, and they license it to Specialized. Second, Specialized owns the Canadian trademark. (And it seems that ASI and Specialized have come to terms over that.) Third, Dan Richter opened a shop in Cochrane, Alberta, and named it Café Roubaix. He also produces cycling goods, most notably wheels, that are branded with the word Roubaix. Finally, by virtue of its trademark, Specialized has the right to question Richter’s usage of the name.
Does that make Specialized look like a cool company? Probably not. Is it empathetic? No. Do consumers have a right to buy elsewhere because they don’t agree with Specialized's initial threatening action in this case. Of course.
Specialized didn’t help its case by remaining largely mute for the first half of the week. The only word for days was a feeble and legalistic statement that the company is “required to defend or lose its trademark.” Breaking the silence on Tuesday, Specialized released a 39-word statement that said they were working with Richter to find a solution. Almost simultaneously, Richter posted on Facebook that he had spoken with Sinyard and “everything will be working out fine.” A video of a sheepish Sinyard apologizing to Richter surfaced the next day. And finally, Thursday night, Specialized broadcast a forthright and contrite letter from Sinyard.
The headline: Sinyard was sorry and took full responsibility. Perhaps the most salient point, however, was that he acknowledged that Specialized had gone too far in some cases and that the company was committed to reassessing its intellectual property and trademark pursuits.
The story contained another interesting tidbit. Sinyard explained that Specialized had become so assertive with its claims in the past few years because of the proliferation of counterfeit goods. He said that the company has identified some 5,000 listings of fake Specialized products worth over $11,000,000, and added that the liability and responsibility for defending against such piracy was enormous.
The idea of culpability because of failure of fake product hadn’t really registered for me. But the way Sinyard told it sounded plausible.
“I acknowledge that we have over-reached in some cases,” he said, when I called him up to discuss the conflict. “So we’re going to review everything that’s on the table. In cases that put riders and Specialized at risk, we’re still going to go in with a cannon. We have to. But if we can verify a business, if there’s no need for concern, then we don’t have to be as aggressive. There will be better oversight.”
This seemed to be the most redeeming thing I’d heard out of this story all week. Café Roubaix was keeping its name where it likely otherwise would not have. Mike Sinyard was, as far as I could tell from talking with him, regretful. Better still, he was vowing to improve Specialized’s litigation practices. (Sinyard confirmed that the Epix Gear case that surfaced on Thursday was sent prior to the Café Rouabaix dispute and had been subsequently dropped by Specialized.) In spite of all of the conjecture, rants, and tabloid-style reporting on the issue, something good was going to come of it.
But before deciding that it was all beautiful sunrises and sweet conclusions, I rang up Dan Richter to see how he was feeling. Richter said he is happy with the outcome and is now a licensed user of the trademark Roubaix. “We gained a good understanding of the situation by sitting down with Mike, and we accept his apology,” he said. He added that he will likely re-brand his wheels after the winter to match a line of house-branded components he is launching, though he said that those plans were on the table prior to the dispute with Specialized.
Richter said he didn’t blame Specialized for its position. “If I found out someone was riding wheels with Café Roubaix on them, and they didn’t come from my shop, I would be concerned. If it fails, it reflects on me. Sure, I could disclaim it and say it’s not mine, but it would still reflect on me,” he told me. “So I understand Mike’s and Specialized’s position, especially as one of the biggest bike manufacturers in the world.”
“Because of their size, Mike’s either loved or hated,” Richter said, adding that he was ready to move on. “But I met him face to face, and he’s very personable, very charismatic. I feel no ill will towards Mike or his company. Ten years down the road, I hope we can sit down and have a beer together and laugh about this.”