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David vs. Goliath?

On the surface, the Specialized vs. Volagi case seemed like a case of an industry giant picking on an upstart brand. A closer look reveals that it’s not that simple.

While many details remain vague in the wake of the Specialized vs. Volagi lawsuit, a few things have become clear.

There’s no question the lawsuit put Volagi and the Liscio, its long-distance comfort road bike, more firmly on the map ― while also putting it in a substantial financial hole. To some, Volagi unfairly competed with Specialized. To others, “The Big Red S” came off looking like a bully, and it weathered damaging statements about its R&D department and litigation strategy by a former executive vice president in charge of products. The lawsuit may have thus been costlier for Specialized than for Volagi, even though two million dollars is a lot less money to the giant Morgan Hill firm than half a million is to Volagi.

But why did the lawsuit happen?

The claims

Acknowledging that, “nobody wins in these things,” Specialized founder and president Mike Sinyard explained that the company he founded in 1974 is like his family, and he felt compelled to file suit when he felt it had been injured.

“I was going to just let it go, but I couldn’t. We have this awesome company culture of teamwork and trust here, and when I saw how what they (Volagi co-founders and former Specialized employees Robert Choi and Barley Forsman) did affected the people working here, I had to do it (file suit).”

If for no other reason than the relative sizes of the two companies, struggles like this are often going to be looked at as David vs. Goliath, and Goliath isn’t generally perceived as the good guy.
To hammer home the Goliath image, the defense produced Sean Sullivan, a product manager at Specialized from 1994-1998 and director of equipment and marketing and executive vice president for product and global marketing from 2004-2007. (Not to be confused with Mavic USA’s marketing director Sean Sullivan.) Sullivan testified that, “Sinyard and Specialized have a pattern and practice of suing competitors” to “tie them up in court.”

In response, Sinyard told VeloNews.com, “People can say anything. But I say, ‘show me all of these lawsuits.’ They’re not there.”

On the subject of the company’s history in court, former Specialized Chief Brand Officer Ben Capron, who worked for Specialized for 18 years and now works for National Interscholastic Cycling Association (NICA), said, “What Mike cares about first and foremost is riders, what riding can do for people and advancing that, the people at Specialized, and Specialized dealers. All of those constituencies are relying on Specialized to perform. He’s a very competitive business person, and that competitive nature and wanting to do right by those constituencies results in aggressive behavior sometimes.”

Rather than being about squelching competition, Sinyard said the case was a matter of principle.

“I wasn’t worried about that (Volagi) bike, and it was never about getting a lot of money from them,” he said. “It was about making a friggin’ point.”

Choi and Forsman see it differently – and Sinyard looks at what they claim as transparency in their dealing with the company as anything but.

Both quit in April 2010 but stayed on longer ― Forsman for a couple of weeks and Choi until the end of August. They told Sinyard and their immediate supervisors that they were starting a company in the bike industry and refused to reveal what the company was or would do. An email from Choi to Sinyard on the eve of the 2010 Interbike show, where the Volagi bike was unveiled, acknowledged that, “the bikes at Volagi do compete with Specialized.”

Two months before resigning, Forsman requested and received engineering drawings of the Roubaix, which is the Specialized bike that fills the niche closest to that of the Volagi. That same month (February 2010), the company put Choi on its test program of the unreleased 2011 Roubaix and gave him the bike to evaluate.

Also in February 2010, using his Specialized email address, Choi requested price and lead-time quotes on tooling charges on carbon frames and components from VIP, a Specialized carbon molding vendor, for a fictitious “Robert Volagi.”

Choi knew that Specialized had done a trademark search on the name “Venga” but was not using it; Volagi later used that for the original name of its bike, though Volagi changed the name to “Liscio” after Specialized objected to Venga. In May 2010, Choi emailed some Specialized sales documents (territory call reports) to other Volagi employees.

While both sides agree on these facts, they strongly disagree on the motivation behind them and whether or not they furthered Volagi. For instance, regarding the email to VIP introducing “Robert Volagi,” Choi said, “I didn’t want to present myself as a Specialized employee; I didn’t think that was right, and I didn’t want to get Specialized pricing. I didn’t go after any Specialized manufacturer making Specialized frames. VIP at the time was only doing carbon components for Specialized; they were just getting into carbon frames. I just asked for costs for molding.”

Sinyard found Choi’s explanation to be far-fetched and “insulting.”

All items taken from Specialized were returned, and while Choi and Forsman claim to have voluntarily pointed out their existence and then turned them over to the company, Sinyard claims that it took letters from company lawyers to get them back and that he only knew about them following a search of Choi’s company computer.

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