The U.S. International Trade Commission has enacted an import ban and cease & desist order against new sales on Peloton and iFit. This is related to an ongoing lawsuit by Dish Network, and the news was first reported by Reuters.
Update – Following this news, Peloton has shared they have developed new streaming technology which can be pushed to devices via software update.
Before diving too deep, there is some important context to be aware of. While the import ban would impact Peloton’s ability to import & sell new hardware devices, like the Peloton Bike, Bike+, Tread, and Row, it shouldn’t have an impact on Peloton members who already own a piece of Peloton hardware, or who use the app. Specifically – an import ban should not affect current members ability to access their regular content & classes from Peloton – or prevent Peloton from creating new classes. Furthermore, this decision only imports into the United States – not Peloton’s other operating countries of Canada, the United Kingdom, Germany, and Australia.
The import ban itself does not go into effect right away. According to Reuters:
President Joe Biden’s administration has 60 days to review the import ban before it takes effect, though presidents rarely reverse such actions. Parties can also appeal ITC decisions to the U.S. Court of Appeals for the Federal Circuit, which reviews patent disputes, after the 60-day review period ends.
This has been implemented as a cease & desist order, which includes an import ban. The ruling states that Peloton can not import new devices into the US, but also can’t market, advertise, distribute, or sell them. As mentioned in previous earnings calls, Peloton does have a large amount of inventory of both the Peloton Bike & Tread sitting in warehouses around the US – but from the wording of the ruling, it sounds like Peloton would not be able to sell any inventory that is already in the US either.
The main part of the cease & desist order issued last night states:
IT IS HEREBY ORDERED THAT RESPONDENT Peloton Interactive, Inc. of New York, New York cease and desist from conducting any of the following activities in the United States: importing, selling, offering for sale, marketing, advertising, distributing, transferring (except for exportation), soliciting United States agents or distributors, and aiding or abetting other entities in the importation, sale for importation, sale after importation, transfer (except for exportation), or distribution of certain fitness devices, streaming components thereof (as defined in Definition (G) below) that infringe one or more of claims 16, 17, and 20 of U.S. Patent No. 10,469,554 (“the ’554 patent”); claims 10, 11, 14, and 15 of U.S. Patent No. 10,469,555 (“the ’555 patent”); and claims 1, 2, and 4 of U.S. Patent No. 10,757,156 (“the ’156 patent”) (“Asserted Patents”) in violation of section 337 of the Tariff Act of 1930, as amended (19 U.S.C. § 1337).
The cease & desist order leaves an exclusion so that parts can still be imported into the US, specifically so that Peloton would be able to continue service & repair of products for those who already own devices.
When reached for comment, a Peloton spokesman said the following about the U.S. International Trade Commission’s (US ITC) ruling:
Peloton is committed to offering a high-quality, seamless user experience on our platform. Today’s decision by the International Trade Commission – which does not go into effect until the conclusion of a 60-day review period – will in no way disrupt service to our current Members. Peloton takes the value of intellectual property rights very seriously and is disappointed in today’s ruling, as we believe we do not infringe Dish’s patents.
This ban ties back to a lawsuit filed by Dish Network approximately two years ago. For those unfamiliar, Dish Network first sued Peloton and iFit in the spring of 2021, alleging infringement upon five of their patents. In particular, the suit deals with Dish Network’s ability to stream different qualities of video based on the bandwidth of the connected user, which can prevent streaming and buffering issues. In addition to suing, Dish Network also sent a request to the U.S. International Trade Commission asking them to block imports from the companies until the suit was settled.
In September of 2022 a judge declared that Peloton does infringe upon numerous Dish Network patents. A few months later in November of 2022, the US ITC Commission agreed to hear the case and consider an import ban, which led to this latest decision today to enact one, which was implemented via a cease & desist order issued by the US ITC.
You can read more about this ruling against Peloton & iFIT via Reuters and a number of other media outlets.
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