Specialized v. Volagi verdict: Choi liable, Forsman not liable

14 comments
By Matt Pacocha, US editor, from Boulder, CO | Friday, Jan 13, 2012 9.00pm

After more than a week in court, just one charge was left today in the legal battle between Specialized and two of its former employees, who'd left to form rival bike company Volagi: breach of contract. Just before noon, local time, the verdicts came in: Robert Choi was found liable; Barley Forsman was not.

But the message may have been in the award of damages; Choi was ordered to pay just US$1 to Specialized. Volagi (@Volagi) tweeted the verdict via Twitter – “Specialized gets ONE dollar!”, also noting that theyre allowed to keep the Long Bow flex design, and "the color red".

“We just got out of the courtroom and we’re heading back to our lawyers’ [offices], to celebrate,” said Choi, when BikeRadar reached him by phone. “When it was read, ‘for Robert Choi we award on behalf of Specialized,’ of course my heart dropped, and then they said the damage award of $1. We hope that the jury is sending a message to Specialized that this was unjust in a way.”

Specialized offered BikeRadar the following prepared statement from company president Mike Sinyard: “This lawsuit was a matter of principle and about protecting our culture of trust and innovation. We respect the ruling of the court in our favor. We are very satisfied with the outcome and the damages set at $1. We really want to put all our passion and time into growing the sport of cycling.”

According to Choi, he was found to be liable due to his actions after putting in for resignation from Specialized. “We formed the company right at the time Barley and I told them we quit,” said Choi. “But they enticed me to stay and work, and finish my work; I did that on their behalf, and they used that against us. At the end of the day there was this overlap in the written contract saying that I was still employed.”

Forsman left Specialized at time of resignation and before co-founding Volagi; therefore he was found not liable for breach of contract. Choi was content with the verdict. “More than anything else, we can tell the world that we didn't do anything wrong,” he said. “They told us that I breached my contract by staying on to work for them at their request. It was a good-faith gesture and they used that against me.”

The future of Volagi

Choi said he just wants to get back to building his company and Volagi bikes. “We want to go back to running our company, and let the world know that we have something so special that even a company like Specialized were willing to spend that kind of money to stop us from competing,” he said. “The truth will be told in the market place by people testing out bikes.”

The pair will, however, explore the possibility of recouping some of their own legal expenses. “Because they completely dropped the trade secret part of the suit, it allows us to go and potentially file suit for malicious prosecution,” said Choi. “We'd obviously like to get our legal fees back and the damages that have been caused.”

He’s proud of the brand too. “Given the resources and the size of the company that went after us, and the fact that we actually were able to weather through this and we stood up for our rights, it’s just a tremendous boost,” said Choi.

Leading to the verdict

Specialized brought suit to Volagi's co-founders in October 2010, soon after the duo left Specialized to found their own carbon bicycle company. In 2011 Volagi's single product, the Liscio road bike, gained acclaim for its swooping lines and use of disc brakes. In May of 2011, the company received a patent for their ‘long-bow’ seatstay design.

Morgan Hill based Specialized originally sought damages for the misappropriation of intellectual property. As of this morning, however, Bicycle Retailer, covering the event from the courthouse, reported that just the single claim of breach of contract against the two former employees was still in play.

According to the Mercury News, Specialized had to put aside their most serious claims of trade secret theft when the judge curtailed the scope of the suit. Instead, they settled on an amount of at least $41,500 in damages to send a message about employees setting up a rival company while already in employment.

In closing arguments, as reported by the Mercury News, Volagi’s lawyer told the jury the case was about stifling competition. His opposite number countered that Specialized, one of the world’s largest bike manufacturers, didn’t need to worry about rivals the size of Volagi and the case was about “two employees who breached their contract with us".

The duo, who both worked in Specialized’s equipment department rather than in bike design, deny the claims of the original lawsuit, filed last year, and say the suit was an attempt by a large company to wipe out a competitor.

Supporting the theory that all publicity is good publicity, Californian website Bohemian.com say sales of Volagi bikes have rocketed since news of the case broke. Staff at the Trek Bicycle Store in Santa Rosa say they've sold at least two Liscios every day in the past week.

Thanks to James Partridge of www.bikelaw.com for help with the legal terminology used in this article.

You can follow BikeRadar on Twitter at twitter.com/bikeradar and on Facebook at facebook.com/BikeRadar.

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User Comments

There are 14 comments on this post

Showing 1 - 14 of 14 comments

  • What Specialized has done by bringing this ridiculous lawsuit against Robert Choi and Barley Forsman is disgusting and borderline evil. I have myself been involved in a civil lawsuit, and though I was successful, it was the most stressful, miserable experience in my life. Even a sustained period of unemployment was a bed of roses in comparison. My heart goes out to Robert and Barley for having to endure this.

    Let’s look at the record. According to the information introduced at trial, Specialized spent more than $1.5 million before the trial even started to prosecute this lawsuit. Specialized’s own estimate of its maximum damages (which the jury rejected) was around $41,500 (Specialized was claiming a royalty of more than $200 on every frame Volagi sold – I’ll let the industry experts opine whether that was reasonable). Robert and Barley spent more than $350,000, their entire life’s savings, to defend themselves. Spending $1.5 million to try to recover $40,000 – what does this say about Specialized?

    The judge threw out Specialized’s claims that Robert and Barley had stolen Specialized’s trade secrets. So the only claim against them was that they breached their employment contract by planning their new business while still working for Specialized (on the theory I suppose, that a Specialized employee must devote 100% of his time to the Specialized cause and is not permitted to have outside thoughts). But the jury obviously determined that Robert’s breach of contract was trivial and that Specialized did not actually suffer any real harm because of the breach.

    Mike Sinyard's claim that the lawsuit “was a matter of principle and about protecting our culture of trust and innovation" is a bunch of malarkey. This lawsuit had nothing to do with principle. Specialized was not hurt one little bit by Robert’s and Barley’s actions. Mike Sinyard brought this suit as an attempt to use Specialized’s enormous resources to squash a small competitor and to send a message to its remaining employees (and others in the industry) that Specialized is prepared to use its resources to squash them too.

    If you admire the use of litigation as a competitive business strategy, by all means buy Specialized products. I for one am disgusted by such tactics, and I will never buy a Specialized product again.

  • if anyone should be suing these fellas for copying the 'longbow' design, it should be Corratec...

  • Man, what disgusting pigs! Thank god the Venge/Transition are too bloated and ugly, and the Shiv/Tarmac SL4 overpriced. I shall henceforth wear my (used) Specialized Helmet with unending shame. Maybe they just got spiteful after losing Cav....I reiterate: disgusting pigs.

  • I was already disappointed with the "Epic Designs" affair (now Revelate Designs). Specialized will be getting less that $1 from me.

  • I’m glad that Volagi basically won. I’m a happy owner of one of their bikes. It is great bike and fits well in the Pacific Northwest with the disk brakes and smooth ride.

    It is sad that Specialized chose to sue, they didn’t have to. But, I must say that it seems like every place I have worked in the past 15 years, I have had to sign a non-disclosure, non-compete agreement which is really hard to sign. Basically it says that you will not work in the same field or industry for a competitor (or start your own competing business) if you leave that company. Conventional wisdom is that you kind of ignore it because they can’t deny you an ability to make a living.

    On the other hand, you want to hire people that are entrepreneurially minded, but not so much so that they would actually want to be entrepreneurial and end up being your competitor. I think that is a never ending dilemma for both the owners and potential employees. I’d be interested to get others peoples perspective and experience with this.

  • Hopefully the amount of publicity this has generated for their brand somewhat makes up for the amount they had to spend on lawyers. I wish them all the best for the future.

  • Specialized's actions are typical of the bullying and authoritarian behaviour we have come to expect from American corporations. If only it were possible for the descendents of John Kemp Starley to take Specialised for every penny they have for copying so many features of his design.

  • Wonderful bike, I'd love one. Makes a Specialized Roubaix look antique! Disc brakes are the way forwards. Time for a UK distributor lads :-)

  • Really glad Volagi have won effectively won this. I was a big fan of specialized before but I'll never buy from them again and I won't be recommending them either.

    Hopefully Volagi will get a UK importer. If not, it'll have to be cheap chinese frame for me from now on.

  • And how many of you own Apple products........

  • u guys are a bunch of retards if you think that these 2 traitors are innocent. i would sue them to if i had my own company. they stole contacts, sales figures, itelectual propertys, manufacturing contacts etc. choi made up a fake email while at specialized and sent himself sales figures...oh, but he said it was cuz his computer didnt work.. foreskin was the industrial design mannager...u dont think he saw top secret sh#t? these guys didnt work in a closet down the street ... they were in the building. they are lars and traitors in my book..ill never buy one of there tainted products. in a society where loyalty is a lost moral i applaud specialized for standing up for what they believe and not letting these thieves and infadels get off so lightly once they work for a company, steal there secrets, work on there own company on specialized dime etc. and play the victim. please. u sheep need to open your eyes and read wtf is really going on.

    they play the 'were small business guys with a dream card' but look at the facts , they worked there, stole ideas, stole contacts, stole information , lied, and then want the pity from all u fools.... you guys trully are fools with these comments. you do know that choi and barley worked together at cammel back before both coming to specialized right? u think they both came up with this idea right after both quitting specialized at the same time. they came with an intent to get information. they did and now you suckers have bought in.

    do a little reasearch before you hammer away at big companies just cuz they are bigger then you could do.

  • Night Rider 234 - Seriously? How can you expect anyone take you seriously when your comment is so poorly written. No grammer at all. You do realize that we should use capital letters at the beggining of a sentence.

    Robert and Barley are cyclist, both holding many records and between the two, over 40 patents in the bicycling industry. They are true innovators, and without innovation, how do we discover?

    Take your own advice - do some research. And, by the way "cuz" is not a word.

  • Night Rider 234 - Seriously? How can you expect anyone take you seriously when your comment is so poorly written. No grammer at all. You do realize that we should use capital letters at the beggining of a sentence.

    Robert and Barley are cyclist, both holding many records and between the two, over 40 patents in the bicycling industry. They are true innovators, and without innovation, how do we discover?

    Take your own advice - do some research. And, by the way "cuz" is not a word.

  • grammer has nothing to do with anything as english is not my first language. the points i make are everything. i dont know what there 40 patents are for , nor do i really care about there patents...or further more what that has to do with my points on them being scandalous, liares and cheats to an employer. plain and simple.

    if you would like to defend them then please do logically in the context of this blog/ trial..., but to attack my thoughts however written shows your lack of class..not my lack of grammer

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