Skimpy External “Listening” (Insufficient External Research)

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Case No. 2

As mentioned, trade marketing is a tricky proposition. Trade marketing directors have a multitude of considerations in going to market. External research is a critical step for market sizing, budget analysis, and “seeing around corners” in what obstacles may come. Our media consulting practice supports trade marketing leadership on marketing considerations, which covers competitive considerations, but the input of legal counsel should also be an important voice in the process. Our next case shows why:

External “Listening”: Advertising Effectiveness Case Study (Peleton)
Peleton, iFit, and Lululemon are in the business of streaming technology through workout equipment they sell. Each of these companies are headquartered and operated in North America, which hardware largely imported from China. The three brands are among many in the “connected fitness” space that run streaming services through hardware they claim as proprietary.
However, DISH Network holds a US patent on streaming technology through workout equipment. It appealed to a US International Trade Commission court through a lawsuit alleging infringement by the companies from August 2016 to March 2021.
Trade Marketing: Peloton sells connected stationary bikes and treadmills; iFit (once known as ICON Health & Fitness), owns connected fitness maker NordicTrack, and in 2020, Lululemon bought connected fitness brand Mirror for $500 million.
Where they went wrong: Hindsight is 20/20, and the wide-reaching language of the DISH network patent (surely secured in an earlier pre-streaming era) may have caught iFit, Peleton and Lululemon/Mirror unaware. But a patent search might have caused these brands to proactively approach DISH. A potential streaming deal may have enabled DISH to offer Peleton, iFit, and Mirror content for in-home streaming via TV, with persistent messaging for offers for viewers to purchase the branded devices. An ounce of prevention is worth a pound of cute.
The Outcome: The U.S. International Trade Commission judge sided with DISH Network.

“Customers of these products could just as easily exercise in front of their existing television – in particular, a television that is lawfully using the technology of the Asserted Patents,”
DISH Network, discussing the ITC judgement.
In addition, Peloton and iFit previously sued one another for patent infringements: iFit asked the U.S. International Trade Commission block Peloton’s device imports. Peleton and iFit have since settled ongoing litigation, with iFit scrapping leaderboard features, and Peloton agreeing to license iFit patents on remote control technology. Peleton meanwhile still has ongoing legal issues concerning the licensing of music featured in the service.

The Takeaway: Proceed with caution when considering external research, such as that concerning patents, licensing rights, or other matters that can result in legal costs and headaches. This is true particularly for international trade marketing (when entering new markets), as courts are likely to favor the domestic or local party over a new/foreign player.

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