Peloton Pays $75 Million To Settle Lawsuit with Dish Network

Peloton has managed to put another lawsuit in the rearview mirror. In a recent development, the company announced that they’ve come to an agreement with Dish Network to settle a long-standing patent dispute.

The disagreement between the two companies began in 2021 when Dish Network filed a patent lawsuit against Peloton. The legal tussle came to a head in 2022 when a judge ruled that Peloton had indeed infringed upon Dish Network’s video streaming patents. The situation escalated further in 2023 when the US International Trade Commission (ITC) decided to impose an import ban on Peloton as a result of the ruling.

However, in a surprising turn of events, both Peloton and Dish Network have now decided to bury the hatchet. The settlement, which was made public this morning, outlines the terms of their agreement. As part of this settlement, Peloton will make a one-time payment of $75 million to Dish Network. In return, Peloton gains worldwide and royalty-free access to the disputed streaming patents, the lifting of the import ban, and the resolution of ongoing lawsuits. Additionally, both companies have committed not to pursue legal action against each other in the future.

The official statement from Peloton goes as follows: “On May 1, 2023, Peloton and Dish reached an agreement through a Settlement, Patent License, and Release Agreement. This agreement not only resolves the ITC matter but also concludes the Texas Litigation. The Settlement Agreement entails Dish’s prompt actions to terminate the ITC investigation, retract the Remedial Orders, and dismiss the Texas Litigation with prejudice. The agreement also includes broad mutual releases, a comprehensive fully paid royalty-free global license for Peloton and its affiliates to utilize Dish’s ABR patents, encompassing the patents contested in the ITC investigation and Texas Litigation. Moreover, the agreement entails covenants against initiating certain types of future litigation, along with Peloton making a one-time settlement payment of $75 million to Dish.”

Before reaching this settlement, Peloton had been diligently working to mitigate the impact of the import ban. They had previously revealed plans to update their hardware devices with new streaming technology via a software update. This move could potentially have lifted the threat of the ban and reduced the financial repercussions stemming from the patent lawsuit loss.

Peloton’s CEO, Barry McCarthy, also addressed the settlement in a letter to investors. He noted, “Earlier today, we announced a settlement and patent license agreement with DISH Technologies. While the settlement’s cost ($75M) and associated expenses will exert considerable pressure on Q4 free cash flow, we believe this resolution serves our growth agenda better. It dispels uncertainty and removes a significant distraction from our day-to-day operations, despite its short-term impact on Q4 cash flow.”

McCarthy further emphasized that the settlement would enable Peloton to channel its efforts into enhancing various features and making improvements, rather than constantly grappling with the uncertainty of being able to sell their products in the US.

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