Lawsuit

[1bikee]

Does anyone know how the BikeE lawsuit against GIANT was resolved? GIANT ruined BikeE and forced the company out of business so GIANT could come out with a 50 lb. BikeE copy known as The Revive. Did BikeE owner prevail and get enough damages payment that he can again start-up BikeE, the best recumbent ever?

The lawsuit was originally filed against GIANT-US who refused the papers. Then the millionaire BikeE owner paid to have the lawsuit papers translated into Taiwanese and paid to have them served in Taiwan. Then, GIANT-US agreed to accept the lawsuit papers.

If BikeE had just kept the mfg in Oregon instead of mass producing through GIANT who deliberatly used defected parts to force numerous recalls and forcing BikeE into bankruptcy. If BikE had let those lusting after their own BikeE wait their turn for their bike rather than trying to satisfy the masses all at once--BikeE would still be in business.

[koozabear]

Giant wasn't the problem with BikeE.......the millionaire new owner was. He had ideas for the company that were out of line with what BikeE was.......... a low-cost recumbent that was durable and fun to ride. He wanted a bike with all the bells and whistles and fancy crap that drives the cost through the roof. In addition, he wanted to make ALL sales online, not out of any store.

He spent $400,000 on 'consultant fees' to have them design a new bike for BikeE and the funny thing is the guys in the shop designed almost the exact same bike.......and for ALOT less money. How do I know all this? Because I was working there as a welder when it all happened. When he approached us with his ideas, I explained to him the flaws with his ideas but that I would support him and the company in the effort. Needless to say, 4 months later when sales fell of a cliff, I was laid off along with 2/3 of the employees there.

Giant did make some bad parts for BikeE, but they made good on their bad actions (I was there for that too).

[matth]

Red ink, recalls doomed maker of recumbent bicycles

11/21/2004

By SHERRI BURI McDONALD / Associated Press

All that's left now of BikeE, a once-popular bicycle maker that outsourced work to Taiwan to cut costs, is the name and a thick, growing file of legal papers in U.S. District Court in Eugene.

BikeE's demise and ensuing legal problems provide a cautionary tale for small manufacturers that are trying to stay competitive by using overseas contractors to make their products.

BikeE stopped selling its distinctive semi-recumbent bikes in 2002. For the past two years, BikeE and two of its former investors have been entrenched in a messy legal dispute with Taiwan-based Giant Manufacturing Co.

Faced with a cash crunch several years ago, BikeE made the fateful decision to reduce costs by outsourcing all of its production to Giant. Three product recalls and a dip in worldwide bicycle sales followed. So did a series of legal claims and counterclaims, alleging shattered contracts and money owed.

In August 2002, Giant sued BikeE, alleging that the Corvallis-based company failed to pay Giant $370,549, plus interest, for bicycles that Giant had made and shipped.

In July 2004, U.S. District Court Judge Thomas Coffin signed an order requiring BikeE to pay Giant the $370,549, plus 9 percent annual interest. All other claims, such as Giant's contention that BikeE investors John Acres and Richard Carone are personally responsible for BikeE's debt, and BikeE's claim for damages because Giant delivered defective merchandise, will be heard by a jury. Trial is scheduled for Jan. 11.

Last month, BikeE filed a separate lawsuit claiming that Giant intentionally put BikeE out of business. BikeE alleges that Giant claimed to be interested in investing in BikeE as a way to gain access to BikeE's customer list, trade secrets and sales projections. Giant then used that information to secretly create its own semi-recumbent bike and to take BikeE's market share, the lawsuit claims.

Giant categorically denies those allegations, Giant's Portland-based lawyer, Richard Urrutia, said.

Giant had made bikes for BikeE since 1998, but in 2002 the two companies put their manufacturing agreement in writing. In July 2002, Giant used a provision of the new contract to declare BikeE in default because Bike E's payments were a bit late — a situation that had never bothered the company in the past, according to BikeE's court documents. Giant refused to make any more bikes for BikeE, which forced BikeE out of business, BikeE's lawsuit said.

BikeE is asking for $2 million in damages. Giant denies those claims.

Urrutia argued that BikeE's own documents and testimony show that BikeE went out of business because of a tarnished reputation after several product recalls, decreasing sales and a weak market after the Sept. 11, 2001 terrorist attacks. BikeE's demise was well under way by October 2001, according to Giant's legal documents.

Further, Urrutia said Giant didn't release a prototype of its Revive bicycle until at least a month after BikeE closed, so how could it have unfairly competed with BikeE?

The feud is a bitter one. Settlement offers have been proposed and rejected.

"At this point, we've spent so much money and we think we have a multimillion-dollar claim against them," said Acres, a BikeE investor who served temporarily as the company's president in 2001. "We think BikeE was murdered."

Giant's lawyer Urrutia responds: "Giant categorically denies that it caused BikeE to go out of business, or that it had any plan to put BikeE out of business."

Over the years, the Willamette Valley has gained a reputation as a center for niche bicycle manufacturing. Burley Design Cooperative, Co-Motion Cycles and Bike Friday are all based in Eugene. Those firms all use some parts or components that are manufactured overseas, but local workers build the bikes. That's in stark contrast to the rest of the industry.

"Most bicycle manufacturing has now gone overseas," said Megan Tompkins, editor of Bicycle Retailer Industry News.

Intense price competition is even driving some of the high-end manufacturing overseas, and Taiwanese factories are picking up that work, she said.

The challenges BikeE faced aren't unique to bicycle manufacturing.

"The lesson is a difficult one," said Acres, founder of Acres Gaming Inc., a developer of casino games and equipment. He sold that business to International Game Technology.

Now, Acres is president and owner of Bigha Development Inc., an 11-employee, Corvallis-based maker of outdoor-related products.

"If you're thinking about starting a business," Acres said, "you need to give more thought to how you're going to compete with lower cost labor. You cannot build high-volume, low-cost goods here in the United States."

An alternative for small U.S. manufacturers is to make high-quality, customized products, for which customers are willing to pay more, he said.

BikeE's story began in 1993 when founders David Ullman, a mechanical engineering professor at Oregon State University, Paul Atwood and Richard Rau created a high-quality, semi-recumbent bicycle with a compact wheelbase.

With the crank behind a small front wheel, BikeE's wheelbase design resolved some of the shortcomings of earlier recumbent designs. It offered stability at high speeds and maneuverability at low speeds.

Sales grew from 854 units (revenues of $523,000) in 1996 to a peak of 7,427 units ($4.6 million revenues) in 2001, according to legal documents filed by BikeE. But the company never made a profit. Annual losses ranged from $225,000 in 1998 to $894,000 in 1999, the documents show.

To keep the business running, BikeE sold stock to about 35 investors and borrowed money.

Looking for a way to trim costs, BikeE contracted with Giant Manufacturing in 1998 to produce its lower-priced models, and eventually Giant made all of BikeE's products.

From August 2001 to February 2002, BikeE announced three product recalls — for pins in the front suspension fork that could become loose and fall out, for problems with the steerer tube separating from the front fork, and then for fractures in the seat slider, allowing the seat to come loose from the frame.

"The recalls devastated BikeE's sales and reputation," BikeE said in court documents.

BikeE claims damages of $566,033 for the steerer tube and seat defects.

Giant's lawyers said in court documents that the faulty components were manufactured by third-party vendors, not by Giant. Red ink, recalls doomed maker of recumbent bicycles

11/21/2004

By SHERRI BURI McDONALD / Associated Press

All that's left now of BikeE, a once-popular bicycle maker that outsourced work to Taiwan to cut costs, is the name and a thick, growing file of legal papers in U.S. District Court in Eugene.

BikeE's demise and ensuing legal problems provide a cautionary tale for small manufacturers that are trying to stay competitive by using overseas contractors to make their products.

BikeE stopped selling its distinctive semi-recumbent bikes in 2002. For the past two years, BikeE and two of its former investors have been entrenched in a messy legal dispute with Taiwan-based Giant Manufacturing Co.

Faced with a cash crunch several years ago, BikeE made the fateful decision to reduce costs by outsourcing all of its production to Giant. Three product recalls and a dip in worldwide bicycle sales followed. So did a series of legal claims and counterclaims, alleging shattered contracts and money owed.

In August 2002, Giant sued BikeE, alleging that the Corvallis-based company failed to pay Giant $370,549, plus interest, for bicycles that Giant had made and shipped.

In July 2004, U.S. District Court Judge Thomas Coffin signed an order requiring BikeE to pay Giant the $370,549, plus 9 percent annual interest. All other claims, such as Giant's contention that BikeE investors John Acres and Richard Carone are personally responsible for BikeE's debt, and BikeE's claim for damages because Giant delivered defective merchandise, will be heard by a jury. Trial is scheduled for Jan. 11.

Last month, BikeE filed a separate lawsuit claiming that Giant intentionally put BikeE out of business. BikeE alleges that Giant claimed to be interested in investing in BikeE as a way to gain access to BikeE's customer list, trade secrets and sales projections. Giant then used that information to secretly create its own semi-recumbent bike and to take BikeE's market share, the lawsuit claims.

Giant categorically denies those allegations, Giant's Portland-based lawyer, Richard Urrutia, said.

Giant had made bikes for BikeE since 1998, but in 2002 the two companies put their manufacturing agreement in writing. In July 2002, Giant used a provision of the new contract to declare BikeE in default because Bike E's payments were a bit late — a situation that had never bothered the company in the past, according to BikeE's court documents. Giant refused to make any more bikes for BikeE, which forced BikeE out of business, BikeE's lawsuit said.

BikeE is asking for $2 million in damages. Giant denies those claims.

Urrutia argued that BikeE's own documents and testimony show that BikeE went out of business because of a tarnished reputation after several product recalls, decreasing sales and a weak market after the Sept. 11, 2001 terrorist attacks. BikeE's demise was well under way by October 2001, according to Giant's legal documents.

Further, Urrutia said Giant didn't release a prototype of its Revive bicycle until at least a month after BikeE closed, so how could it have unfairly competed with BikeE?

The feud is a bitter one. Settlement offers have been proposed and rejected.

"At this point, we've spent so much money and we think we have a multimillion-dollar claim against them," said Acres, a BikeE investor who served temporarily as the company's president in 2001. "We think BikeE was murdered."

Giant's lawyer Urrutia responds: "Giant categorically denies that it caused BikeE to go out of business, or that it had any plan to put BikeE out of business."

Over the years, the Willamette Valley has gained a reputation as a center for niche bicycle manufacturing. Burley Design Cooperative, Co-Motion Cycles and Bike Friday are all based in Eugene. Those firms all use some parts or components that are manufactured overseas, but local workers build the bikes. That's in stark contrast to the rest of the industry.

"Most bicycle manufacturing has now gone overseas," said Megan Tompkins, editor of Bicycle Retailer Industry News.

Intense price competition is even driving some of the high-end manufacturing overseas, and Taiwanese factories are picking up that work, she said.

The challenges BikeE faced aren't unique to bicycle manufacturing.

"The lesson is a difficult one," said Acres, founder of Acres Gaming Inc., a developer of casino games and equipment. He sold that business to International Game Technology.

Now, Acres is president and owner of Bigha Development Inc., an 11-employee, Corvallis-based maker of outdoor-related products.

"If you're thinking about starting a business," Acres said, "you need to give more thought to how you're going to compete with lower cost labor. You cannot build high-volume, low-cost goods here in the United States."

An alternative for small U.S. manufacturers is to make high-quality, customized products, for which customers are willing to pay more, he said.

BikeE's story began in 1993 when founders David Ullman, a mechanical engineering professor at Oregon State University, Paul Atwood and Richard Rau created a high-quality, semi-recumbent bicycle with a compact wheelbase.

With the crank behind a small front wheel, BikeE's wheelbase design resolved some of the shortcomings of earlier recumbent designs. It offered stability at high speeds and maneuverability at low speeds.

Sales grew from 854 units (revenues of $523,000) in 1996 to a peak of 7,427 units ($4.6 million revenues) in 2001, according to legal documents filed by BikeE. But the company never made a profit. Annual losses ranged from $225,000 in 1998 to $894,000 in 1999, the documents show.

To keep the business running, BikeE sold stock to about 35 investors and borrowed money.

Looking for a way to trim costs, BikeE contracted with Giant Manufacturing in 1998 to produce its lower-priced models, and eventually Giant made all of BikeE's products.

From August 2001 to February 2002, BikeE announced three product recalls — for pins in the front suspension fork that could become loose and fall out, for problems with the steerer tube separating from the front fork, and then for fractures in the seat slider, allowing the seat to come loose from the frame.

"The recalls devastated BikeE's sales and reputation," BikeE said in court documents.

BikeE claims damages of $566,033 for the steerer tube and seat defects.

Giant's lawyers said in court documents that the faulty components were manufactured by third-party vendors, not by Giant.

[yuhr]

koozabear, where (what state) do you live?
matth, do you know the situation now? Is bike E patented? Does anyone else have tried to revive bike E or clones?

[Robin Parkes]

There are two bikes very similar to the BikeE. One called Maxarya is made in Canada and the other is HP Velotechnik Spirit made in Germany.

[drbikee]

As one of the founders of BikeE, the technical director and co-designer of most of the products (with Paul Atwood). Here are some facts. BikeE grew on debt as we could get no good investors (middle of the dot-com boom and bikes were not cool investments). John Acres invested heavily and left us alone for 6 months and then walked in and fired the upper management. He took over and killed the company to make his design, the BigHa. He had little understanding of the company, the market or anything else to do with BikeE. The lawsuits are between him (as BikeE) and Giant. Giant was a good partner until Acres became involved. Recalls by BikeE were near or below industry average, so these did not create the demise of BikeE.

I get approached about designing a similar bike about once a year. Would love to, but only with proper funding. The patents are not an issue to a skilled designer.

[Robin Parkes]

I bought my BikeE in May 2002 and the company folded in August 2002. Didn't Giant make the frames? They were well done. I see the BigHa brand is selling laser pens and no bikes
The BikeE was reasonably priced and was the only 'bent that I enjoyed riding. I had a Pashley PDQ SWB 'bent but it was too sharp a learning curve so it went. I'd love another BikeE but it is impossible to transport for my car is a Honda Accord saloon. It is the only 'bent permitted on Northern Ireland Railways. I was invited to try my BikeE on the new train to see if it could be manoeuvered into the bike storage area where the maximum number is four unless you get a kind and understanding conductor ;D.