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WeWork caught between Peloton, Flywheel Sports legal battle

WeWork caught between Peloton, Flywheel Sports legal battle

3 -min read
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3 -min read
Listen to this article

[NEW YORK] WeWork Cos is getting dragged into the escalating legal battle between home-exercise venture Peloton Interactive Inc and one of its smaller rivals.

Peloton is seeking information from WeWork on talks the office-sharing company may have had about Flywheel Sports Inc's at-home bike business, according to a subpoena seen by Bloomberg. Peloton is also demanding details on related topics, such as any talks WeWork might have held with third parties about the lawsuit, the documents show.

WeWork never had conversations about acquiring Flywheel, a person with knowledge of the matter said, asking not to be identified speaking without authorization.

Peloton is ramping up its year-old lawsuit against Flywheel while preparing for an initial public offering that may value it at more than US$8 billion. Last September it accused Flywheel of copying at-home bike technology and infringing on patents. The latest salvo suggests WeWork looked into augmenting its main business of renting out office space by buying parts of Flywheel - discussions that would underscore WeWork's interest in diversifying ahead of its own IPO this year.

A spokesman for WeWork parent company, The We Co, declined to comment, as did representatives for Peloton and Flywheel. It's unclear if WeWork has already been served and if it will contest the subpoena.

Peloton's lawsuit could even put WeWork in the uncomfortable position of opening up about its thoughts on adding fitness equipment to office spaces. Already it's debuted concepts such as Rise by We, which promises users a "complete wellness experience". But publicly opining on the strategies it considered or ultimately adopted risks tipping its hand to competitors.

New York-based Peloton, founded in 2012, sells an at-home spin bike for more than US$2,000, plus a monthly subscription fee. Meanwhile, Flywheel focused on in-person classes, building a network of brick-and-mortar studios and charging about US$30 per session. But in late 2017, the New York startup launched its own at-home bike, rolling out options that include in-home equipment and subscriptions via Amazon and Best Buy.

In June, a review board within the US Patent and Trademark Office agreed to take a second look at the validity of three Peloton patents after finding that Flywheel established a "reasonable likelihood" of winning its argument that the patents cover old ideas.

Peloton's suit against Flywheel, filed in a federal court in Texas known for being friendly to patent owners, is ongoing and the judge recently refused to stay the proceedings. Peloton also added new patent infringement claims to the complaint.

A one-time darling of Manhattan's intense fitness industry, Flywheel was taken over by lender Kennedy Lewis Investment Management. The firm is working with Houlihan Lokey to explore strategic options, including a full or partial sale.

BLOOMBERG