FIRST AMENDED COMPLAINT PARTIES

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA

ATLANTA DIVISION

POWERBAHN, LLC, Plaintiff,

v. FOUNDATION FITNESS LLC, WAHOO FITNESS, LLC, and PATRICK WARNER, Defendants.

Civil Action File No. 1:17-cv-02965-AT Special Master William H. Needle

FIRST AMENDED COMPLAINT

Plaintiff POWERbahn, LLC (“POWERbahn”) states its First Amended

Complaint against Defendants Foundation Fitness LLC (“Foundation”), Wahoo

Fitness, LLC (“Wahoo”), and Patrick Warner (“Warner”) (collectively,

“Defendants”) as set forth below.

PARTIES

1. POWERbahn is a Florida limited liability company with its principal

place of business in Reno, Nevada.

2. Foundation is an Oregon limited liability company with its principal

place of business in Portland, Oregon.

Case 1:17-cv-02965-AT Document 166 Filed 04/03/19 Page 1 of 23

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3. Wahoo is a Georgia limited liability company with its principal place

of business in Atlanta, Georgia.

4. Warner is the Senior Vice President of Foundation. Warner

previously worked as the Senior Vice President of Product Development for

Nautilus, Inc. Upon information and belief, Warner is an individual resident of the

State of Colorado and has extensive contacts with this judicial district directly

related to the conduct that forms the basis of this First Amended Complaint, both

personally and as Senior Vice President for Foundation.

JURISDICTION AND VENUE

5. This Court has subject matter jurisdiction over this action under 28

U.S.C. §§ 1331 and 1338(a), on the grounds that it arises under the patent laws of

the United States including, without limitation, 35 U.S.C. §§ 101 et seq., and 35

U.S.C. § 256.

6. This Court has specific personal jurisdiction over Foundation based

on Foundation’s express consent to venue in this district [Dkt.# 78, paragraph 12],

Foundation’s active participation in this action since its transfer, and Foundation’s

substantial, continuous, and systematic activities and business ties with Wahoo in

this judicial district directly related to the claims asserted herein.


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7. This Court has general personal jurisdiction over Wahoo on the

grounds that Wahoo is organized under the laws of the State of Georgia and

maintains its principal place of business in this judicial district.

8. This Court’s ongoing exercise of personal jurisdiction over

Defendants in this action is consistent with the Georgia’s long-arm statute and

traditional notions of fair play and substantial justice.

9. Venue is proper in this district pursuant to 28 U.S.C. §§ 1391(b)(2)

and 1400.

FACTUAL BACKGROUND

10. POWERbahn is a Reno-based company that researches and develops

products and technology concerning, and owns and licenses patents covering,

exercise devices and methods that incorporate POWERbahn’s proprietary

technology, among other things.

11. POWERbahn discovered that by dynamically adjusting the forces

applied to a flywheel powered by, for example, a human pedaling a cycle

apparatus, one could simulate virtually the experience of riding a bicycle outdoors,

including on specific routes such as the Tour de France. In this example, the forces

applied to the flywheel (rotating member) could mimic the inertia, momentum,


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wind, friction of the road, and hills, so that a rider would feel as if he were cycling

the French Alps on a windy day.

12. From the late 1990s through 2005, POWERbahn’s owner and

manager, Scott Radow, further developed this technology and filed a number of

patent applications covering these and similar inventions, including the patents

asserted herein, and registered his copyright in the software he created to

implement these inventions.

13. Mr. Radow began promoting his invention to the fitness industry.

One of the companies to take notice was Nautilus, Inc., which in 2004 was one of

the major manufacturers of many kinds of exercise equipment, including stationary

bicycles, weight lifting machines, stair climbers, elliptical machines, and the like

from household name brands such as Nautilus, Schwinn, and Stairmaster.

14. In the Spring of 2004, an executive from Nautilus, Inc. (“Nautilus”)

named Patrick A. Warner, having learned of Mr. Radow’s invention, discussed

with Mr. Radow whether POWERbahn would be interested in licensing to Nautilus

the patents, copyright, source code, and know-how that covered the “virtual

flywheel” technology.

15. On May 20, 2004, POWERbahn and Nautilus executed a document

entitled “Term Sheet” (attached as Exhibit A) that provided, among other things:


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• A license of POWERbahn technology and intellectual property to

Nautilus.

• Nautilus would pay POWERbahn $41,883 to develop a prototype

stationary exercise bike embodying POWERbahn technology.

• POWERbahn would be responsible for control and protection of

the intellectual property arising from development of the

prototype, and all such intellectual property, including know-how

and patent rights, would be the subject of the license from

POWERbahn to Nautilus.

• Nautilus would pay POWERbahn a royalty of 5% of net sales of

any product in which the licensed technology was embodied, with

a minimum royalty of not less than $125,000 per year by the third

year of the license.

16. POWERbahn spent approximately nine months developing the

prototype.

17. On March 6, 2005, POWERbahn reported that the prototype was

ready:

In terms of dynamic range given the alternator’s new 3 AC configuration, we tested 400 watts of continuous power output with peaks in excess of 1000 watts. It’s


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this high peak capability in combination with our ability to rapidly adjust alternator resistance to very low levels which allows us to achieve the virtual flywheel effect.

(3/6/2005 and 3/7/2005 E-mails attached hereto as Exhibit B.)

18. Warner responded, “I am glad to hear that it is working so well. I

can’t wait to see it in San Francisco.” (Id.)

19. On March 17, 2005, POWERbahn and Nautilus met in San Francisco

for an initial demonstration of the prototype. The demonstration was highly

successful. Nautilus accepted the prototype and raved about it at a meeting/demo

at the Hyatt Hotel in San Francisco during the International Health, Racquet and

Sportsclub Association (“IHRSA”) industry trade show.

20. With the POWERbahn prototype, indoor cycle training no longer felt

like a boring grind. It had the feel of riding outside, and riders could feel the hills,

both up and down, momentum, and variations of pedal forces within each stroke.

Pat Warner, then Senior Vice President of Product Development for Nautilus said

that unlike other indoor trainers, “it rolls.”


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Pat Warner riding POWERbahn prototype, March 17, 2005.

Pat Warner (Nautilus), Scott Radow (POWERbahn), and Mike Harding (Nautilus)

March 17, 2005 at demonstration of POWERbahn prototype.


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21. With the successful demonstration of the prototype, Nautilus

communicated to POWERbahn that it wanted to move ahead with an exclusive

license of the “virtual flywheel” technology as set forth in the Term Sheet.

22. On March 28, 2005, Warner wrote to POWERbahn stating: “I have

asked Holden [Nautilus’ attorney] to get you the license agreement [as soon as

possible]. He is going to plug in our terms from the term sheet to get the ball

rolling. It was great to actually ride the product. Thanks for the effort that went

into getting it to work.” (3/28/2005 E-mail attached hereto as Exhibit C.)

23. On April 18, 2005, Warner emailed Radow saying “Can’t wait to

shock the industry.” (4/18/2005 email attached as Exhibit D.)

24. In December of 2005, after months of negotiation, Nautilus and

POWERbahn executed the Exclusive License Agreement (“ELA”) (attached hereto

as Exhibit E).

25. The ELA provided, among other things, the following:

• POWERbahn granted Nautilus an exclusive worldwide license to

POWERbahn’s patents, copyrighted software, and know-how in

the field of exercise equipment;

• Nautilus agreed to pay POWERbahn royalty payments of up to

$250,000 as an annual minimum and 5% of net sales;


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• The parties together became obligated to preserve the

confidentiality of protected information, not to use it except as

permitted under the ELA, to limit access to employees and others

bound by separate confidentiality agreements and who reasonably

require access to the information, and to bear responsibility for

employees’ and others’ improper use of confidential information;

and

• Nautilus acknowledged that title to the intellectual property and

any and all modifications, enhancements, derivative works,

improvement patents, copyrights, know-how or the like vested

solely in POWERbahn.

26. To facilitate the ELA, POWERbahn entered an exclusive license

agreement (attached hereto as Exhibit F) with Radow (its owner and manager, and

the inventor of the technology) under which Radow granted POWERbahn an

exclusive license to the technology claimed in Radow’s patents, as well as all

associated copyrights, trade secrets, and know-how (“the Radow-POWERbahn

License”). (Id. § 2.1.) The Radow-POWERbahn License also granted to

POWERbahn the right to sue to enforce these rights. (Id. § 3.2.)


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27. POWERbahn and Nautilus performed under the ELA for three years,

and POWERbahn provided to Nautilus significant volumes of confidential and

proprietary information, trade secrets, know how, and source code under the

confidentiality, restricted use, and nondisclosure provisions of the ELA, as well as

in reliance on POWERbahn’s ownership of all modifications, enhancements,

derivative works, improvement patents, copyrights, and know-how.

28. On December 31, 2008, Nautilus terminated the Exclusive License

Agreement, stating: “Unfortunately, in the current environment we are unable to

continue under the Agreement as it is currently structured.” (12/31/2008

Termination Letter attached hereto as Exhibit G.) Nautilus stated further “It is my

understanding that Pat Warner may have some ideas and thoughts regarding areas

of mutual opportunity for the future between Nautilus and POWERbahn.” (Id.)

29. By the terms of the ELA, Nautilus’s and its employees’

confidentiality, restricted use, and non-disclosure obligations survived termination

of the ELA.

30. Section 7(c) of the ELA between Nautilus and POWERbahn provides,

“Upon termination of the Agreement, each party shall promptly deliver to the other

party all tangible and intangible embodiments, electronic or hard copy, including

all copies, of the other party’s Confidential Information.”


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31. Notwithstanding this provision, Warner and Nautilus failed to return

the source code and other intellectual property that belonged to POWERbahn

promptly as required. POWERbahn was forced to retain counsel in order to obtain

Nautilus’s compliance with Section 7(c) of the Exclusive License Agreement.

(9/2/2009 Letter to Warner attached hereto as Exhibit H.)

32. Even then, Warner failed to return POWERbahn’s confidential

information until October 30, 2009 – ten months later. (10/30/2009 Email attached

hereto as Exhibit I.)

33. In 2010, Warner left Nautilus to join Foundation.

34. In addition to Warner, other Nautilus employees who had access to

POWERbahn confidential information during the term of the ELA left Nautilus to

join Foundation or Foundation affiliated companies, including Andrew P. Lull, Jim

Liggett, and Douglas Crawford.

35. In November and December of 2010, shortly after joining Foundation,

Warner and Radow discussed possible terms for a business arrangement that would

have allowed Foundation to use POWERbahn technology legally. Foundation

would not agree to POWERbahn’s terms, however, and the parties never entered

into a contract.


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36. Upon information and belief, the former Nautilus employees who

joined Foundation or its affiliates were and remain subject to the confidentiality,

non-use, and non-disclosure obligations of their employment, separation, and/or

other agreements with Nautilus that protect the POWERbahn confidential or

proprietary information they learned under the ELA while employed at Nautilus.

37. Without POWERbahn’s knowledge and upon information and belief,

Warner and/or other former Nautilus employees improperly took to Foundation

and/or its affiliates POWERbahn’s source code and “virtual flywheel” technology

provided by POWERbahn to Nautilus in breach of their employment and/or

contractual obligations to Nautilus and of the ELA.

38. Having improperly obtained POWERbahn’s confidential and

proprietary technology through its former Nautilus employees, Foundation and

Wahoo then incorporated POWERbahn’s technology, including the POWERbahn

source code and trade secrets, into a new product that was called the “KICKR

POWER TRAINER” (hereinafter, “KICKR”). Foundation and Wahoo knew or

should have known of Warner’s and the other former Nautilus employees’

confidentiality obligations to Nautilus (and by extension to POWERbahn) and at

best disregarded those obligations or at worst encouraged their breach.


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39. In April of 2012, Warner wrote to POWERbahn about the KICKR

project stating that he was “working on something big. Warner went on to state

that the project would go forward without POWERbahn, which came as a surprise

to POWERbahn since Warner’s e-mail indicated to POWERbahn that Defendants

intended to incorporate illegally POWERbahn technology into the KICKR.

40. KICKR was launched about August of 2012 at Eurobike in Europe

and subsequently in the United States about September of 2012 at the Interbike

trade show in Las Vegas, Nevada.

41. Wahoo’s Chip Hawkins strongly suggested infringement and

misappropriation of POWERbahn technology by publicly stating in writing “We

can add in brake torque dynamically to make up for the delta between real

bike/rider weight and flywheel inertia. This allows us to provide a feel that is

about as close as you can get to going outside and riding without requiring a really

massive flywheel.”

42. The technology to do what Hawkins describes is what POWERbahn

provided to Nautilus, what Warner and the other former Nautilus employees took

to Foundation, and what is incorporated in the KICKr.

43. The KICKR became the largest selling electronic trainer in history.


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44. Foundation and Wahoo sell the KICKR, along with other major

retailers such as REI, Apple Inc., and Amazon.com.

45. On or about August 27, 2012, Wahoo filed provisional patent

application number 61/693,685, entitled “Bicycle Trainer” listing former

Nautilus/then-current Foundation employee Andrew P. Lull and Wahoo’s Harold

M. Hawkins III and as inventors (“the ’685 Provisional”).

46. After seeing Wahoo’s demonstration of the KICKR at the Eurobike

exhibition in Friedrichshafen, Germany, Mr. Radow emailed Warner on August

30, 2012, asking, “know anything about Wahoo’s KICKR trainer?” (8/30/2012 E-

Mail attached hereto as Exhibit J.) Warner replied, “Yes, in fact I know a lot about

it.” (Id.)

47. At the Interbike exhibition in Las Vegas, Nevada, September 19-21,

2012, Foundation and Wahoo provided demonstrations of the KICKR.

Radow/POWERbahn saw Wahoo offer the KICKR for sale at the September 2012

Interbike exhibition, but did not know at the time the extent to which KICKR

incorporated POWERbahn’s intellectual property. Radow/POWERbahn also saw

that Foundation had the exact same KICKR in its separate and distinct trade booth

at the September 2012 Interbike exhibition, seemingly for demonstration.


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48. On August 26, 2013, Wahoo filed utility patent application number

13/975,720 entitled “Bicycle Trainer” listing Wahoo’s Harold Hawkins, and

Foundation’s Andrew Lull as inventors (“the ’720 Application”). Lull previously

reported to Warner while both were employed by Nautilus, and Warner and Lull

both wound up working at Foundation in or around 2010, where, on information

and belief, Lull again reports to Warner. The ’720 Application claimed priority to

the ’685 Provisional and was published on June 19, 2014.

49. On Dec. 19, 2013, Wahoo filed a continuation-in-part (“CIP”) of the

’720 application, which CIP ultimately issued as U.S. Patent No. 10,046,222 on

August 14, 2018 entitled “System and Method for Controlling a Bicycle Trainer”

listing only Wahoo’s Hawkins, Lyle, and Collins as inventors, but omitting former

Nautilus/then-current Foundation employee, Lull (“the ’222 Patent”). The

application that became the ’222 Patent was also published on June 19, 2014.

50. In or around early 2015, POWERbahn learned that Lull was named as

an inventor on the ’720 Application, which published on June 19, 2014.

51. POWERbahn filed the original complaint in this action on June 18,

2015.

52. The ’222 Patent issued on August 14, 2018, and incorporates

numerous inventions, source code, and other intellectual property of POWERbahn


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which, upon information and belief, Defendants learned from the former Nautilus

employees who misappropriated POWERbahn’s information from Nautilus, and

which were covered by the former Nautilus employees’ confidentiality, non-use,

and non-disclosure obligations to Nautilus, and by extension, to POWERbahn.

53. Only upon issuance of the ’222 Patent did POWERbahn begin to

understand fully the extent to which Defendants misappropriated POWERbahn’s

confidential and proprietary information and intellectual property.

CAUSES OF ACTION

Count 1: Direct Infringement of U.S. Patent No. 7,066,865

54. POWERbahn re-alleges the preceding paragraphs as if set forth

herein.

55. POWERbahn holds an exclusive license with the right to sue under

U.S. Patent No. 7,066,865 (“the ’865 patent”) (attached hereto as Exhibit K).

56. Foundation and Wahoo have directly infringed and continue to

infringe at least claim 16, 18, 19, 20, 21, 22, and 24 of the ’865 Patent, literally or

under the doctrine of equivalents, by making, having made, using, selling, offering

for sale, and/or importing into the United States the KICKR Power Trainer and the

KICKR Snap Trainer, which satisfy each element of each asserted claim of the

’865 Patent.


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57. The infringement by Foundation and Wahoo has been willful, each

having actual knowledge of POWERbahn’s and Radow’s rights in the ’865 Patent.

Specifically, Warner acquired a detailed knowledge of the invention claimed in the

’865 patent while an executive at Nautilus under the confidentiality provisions of

the ELA. Warner took this knowledge of the rights claimed in the ’865 patent—

and knowledge of the ’865 Patent itself—with him to Foundation and shared the

information with Wahoo for purposes of infringing the ’865 Patent.

58. POWERbahn is entitled to damages, which cannot be less than a

reasonable royalty, in addition to enhanced damages and attorney’s fees as a result

of Foundation and Wahoo’s willful infringement.

Count 2: Induced Infringement of U.S. Patent No. 7,066,865


herein.

60. Foundation and Warner knew of the ’865 Patent and took action

during the time the ’865 Patent has been in force intending to cause acts of

infringement by each other, by Wahoo, and/or by customers, distributors,

manufacturers, or users of the accused products. Foundation and Warner’s actions

were taken with knowledge that that the acts would constitute infringement of the

’865 Patent.


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61. The intended acts of infringement of the ’865 Patent actually

occurred, including without limitation the making, having made, using, selling,

offering for sale, and/or importing into the United States the KICKR Power Trainer

and the KICKR Snap Trainer by Wahoo, and Wahoo’s manufacturing partners,

distributes, customers, and/or other affiliates.

62. Foundation and Warner either knew the induced acts, if taken, would

constitute infringement of the ’865 Patent, or believed there was a high probability

that the acts would infringe the ’865 Patent and took deliberate steps to avoid

learning of that infringement.

63. Foundation’s and Warner’s conduct constitutes active inducement to

infringe the ’865 Patent.

64. The induced infringement by Foundation and Warner has been willful,

each having actual knowledge of POWERbahn’s and Radow’s rights in the ’865

Patent, Warner having acquired a detailed knowledge of the invention claimed in

the ’865 patent while an executive at Nautilus, under the confidentiality provisions

of the ELA. Warner took this knowledge of the rights claimed in the ’865 patent—

and knowledge of the ’865 Patent itself—with him to Foundation and used that

information to knowingly and willfully induce infringement of ’865 Patent.


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of Foundation’s and Warner’s willful inducement of infringement of the ’865

Patent.

Count 3: Direct Infringement of U.S. Patent No. 7,862,476


herein.

67. POWERbahn holds an exclusive license with the right to sue under

U.S. Patent No. 7,862,476 (“the ’476 patent”) (attached hereto as Exhibit L).

68. Foundation and Wahoo have directly infringed and continue to

infringe at least claim 1-3, 6, 8012, 17-09, and 28 of the ’476 Patent, literally or

under the doctrine of equivalents, by making, having made, using, selling, offering

for sale, and/or importing into the United States the KICKR Power Trainer and the

KICKR Snap Trainer, which satisfy each element of each asserted claim of the

’476 Patent.

69. The infringement by Foundation and Wahoo has been willful, each

having actual knowledge of POWERbahn’s and Radow’s rights in the ’476 Patent.

Specifically, Warner acquired a detailed knowledge of the invention claimed in the

’476 patent while an executive at Nautilus under the confidentiality provisions of


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the ELA. Warner took this knowledge of the rights claimed in the ’476 patent—

and knowledge of the ’476 Patent itself—with him to Foundation and shared the

information with Wahoo for purposes of infringing the ’476 Patent.



of Foundation and Wahoo’s willful infringement.

Count 4: Induced Infringement of U.S. Patent No. 7,862,476


herein.

72. Foundation and Warner knew of the ’476 Patent and took action

during the time the ’476 Patent has been in force intending to cause acts of

infringement by each other and/or by customers, distributors, manufacturers, or

users of the accused products, with knowledge that that the acts would constitute

infringement of the ’476 Patent.

73. The intended acts of infringement of the ’476 Patent actually

occurred, including without limitation the making, having made, using, selling,

offering for sale, and/or importing into the United States the KICKR Power Trainer

and the KICKR Snap Trainer.


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74. Foundation and Warner either knew the induced acts, if taken, would

constitute infringement of the ’476 Patent, or believed there was a high probability

that the acts would infringe the ’476 Patent and took deliberate steps to avoid

learning of that infringement.

75. Foundation’s and Warner’s conduct constitutes active inducement to

infringe the ’476 Patent.

76. The induced infringement by Foundation and Warner has been willful,

each having actual knowledge of POWERbahn’s and Radow’s rights in the ’476

Patent, Warner having acquired a detailed knowledge of the invention claimed in

the ’476 patent while an executive at Nautilus, under the confidentiality provisions

of the ELA. Warner took this knowledge of the rights claimed in the ’476 patent—

and knowledge of the ’865 Patent itself—with him to Foundation and used that

information to knowingly and willfully induce infringement of ’476 Patent.



of Foundation’s and Warner’s willful inducement of infringement of the ’476

Patent.

Prayer for Relief

Wherefore, POWERbahn prays for the following relief:


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(a) Judgment that Defendants have willfully infringed the ’865 patent and

the ’476 patent, directly and/or indirectly, and that POWERbahn is entitled to

damages of not less than a reasonable royalty, plus enhanced damages under 35

U.S.C. § 285, and attorneys’ fees;

(b) Such other relief as the Court may deem just and proper.

Demand for Jury Trial

POWERbahn demands a trial by jury on all matters and issues triable by

jury.

This 3rd day of April, 2019.

/s/Daniel A. Kent Daniel A. Kent Georgia Bar Number 415110 [email protected] KENT & RISLEY 5755 N. Point Pkwy, Suite 57 Alpharetta, GA 30022 Phone: (404) 585-4214 Fax: (404) 829-2412 Kelly Casey Mullally Georgia Bar No. 115114 [email protected] TAYLOR ENGLISH DUMA LLP 1600 Parkwood Circle, Suite 400 Atlanta, Georgia 30339 Phone: (770) 434-6868 Facsimile: (770) 434-7376


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CERTIFICATE OF SERVICE

I hereby certify that I electronically filed the foregoing document with the

Clerk of Court using the CM/ECF system, which will automatically send e-mail

notification of such filing to all attorneys of record.

This 3rd day of April, 2019.

KENT & RISLEY LLC /s/Daniel A. Kent Daniel A. Kent Georgia Bar Number 415110 [email protected] 5755 N Point Pkwy Ste 57 Alpharetta, GA 30022 Tel: (404) 585-4214 Fax: (404) 829-2412 Attorney for Plaintiff


Documents

FIRST AMENDED COMPLAINT PARTIES