Peloton pays $75 million to settle lawsuit with Dish Network, ending risk of import ban on Peloton devices

Peloton has put yet another lawsuit behind them.

This morning, Peloton announced that they had agreed to a settlement with Dish Network over a long-running patent dispute.

Dish Network had won a patent lawsuit against Peloton, which they first filed in 2021. A judge then ruled in 2022 that Peloton was infringing on Dish Network’s video streaming patents. Earlier in 2023, that loss then turned into the US ITC ruling that it would be enacting an import ban on Peloton.

However, now it appears both companies have agreed to put the matter behind them, as shared in the settlement agreement publicly released this morning.

As part of the settlement, Peloton will be paying Dish Network a “one-time settlement payment” of $75 million dollars. In exchange, Peloton is getting world-wide, royalty-free use of the streaming patents in question, the import ban and current lawsuits being dropped, and an agreement for the companies not to sue each other in the future.

The full release from Peloton reads:

On May 1, 2023, Peloton and Dish entered into a Settlement, Patent License, and Release Agreement (the “Settlement Agreement”) to resolve the ITC matter as well as the Texas Litigation. The Settlement Agreement provides for, among other things: (a) Dish to promptly seek termination of the ITC investigation, rescission of the Remedial Orders, and dismissal with prejudice of the Texas Litigation; (b) broad cross-releases between Peloton and Dish; (c) a worldwide, fully paid up royalty-free license for Peloton and its affiliates for Dish patents relating to ABR, including the patents asserted in the ITC investigation and Texas Litigation; (d) covenants not to sue restricting the parties from initiating certain kinds of future litigation; and (f) a one-time settlement payment by Peloton of $75 million to Dish.”

Prior to this settlement being reached, Peloton had been working to try to minimize the impact of an import ban. The company had previously shared how announced they had developed new streaming technology that could be pushed to their hardware devices via a software update, potentially meaning they would no longer be subject to a ban, and just financial penalties from the loss of the patent lawsuit.

Peloton CEO Barry McCarthy addressed the settlement as well in a letter released to investors this morning. He said:

Earlier this morning we announced a settlement and patent license agreement with DISH Technologies. The cost of the settlement ($75M), plus other related expenses, will significantly pressure FCF for Q4. The settlement follows a recent International Trade Commission (“ITC”) determination that Peloton’s method of adaptive bit rate streaming infringes several DISH patents. We were expecting a different outcome and could have appealed the ITC decision. We believe our growth agenda is better served by the settlement because it eliminates a cloud of uncertainty and an enormous distraction to the day-to-day operation of our business, despite its adverse impact on Q4 cash flow.

As McCarthy mentions, this settlement should allow Peloton to focus more on other features & improvements, rather than if they will even be able to sell their products in the US.

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Chris Lewis
Chris Lewis is the creator & founder of Pelo Buddy. He purchased his Peloton in 2018, and uses all the different devices: Peloton Bike, Tread, Row, and Guide. He has been involved in the fitness industry for more than a decade - previously co-founding the websites Mud Run Guide & Ninja Guide. You can find him on the leaderboard at #PeloBuddy.

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