Specialized’s disastrous trademark case is unnecessary to defend the brand

Legal experts weigh in on Specialized's controversial trademark action against a small Canadian bike shop

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It took less than two hours for the story of Dan Richter’s small bike shop to jump from the pages of a Canadian newspaper to the screens of cyclists across the globe, and for that same small story to have a dramatic impact on one of the largest bike brands in the world.

Richter, a veteran of the war in Afghanistan, is the owner of a small shop in the town of Cochrane, Alberta, focused on custom wheel builds and other high-end projects. Business was humming along nicely late last summer when he received a cease and desist letter from Specialized Bicycle Components, the contents of which would spill out onto social media last weekend, setting off a tidal wave of outrage at the bike brand.

According to Richter, the letter demanded that he change the name of his shop, Café Roubaix, and that he cease to sell wheelsets and other components under the same name. Specialized claimed sole rights to the Roubaix mark under Canadian trademark law; a fact that is easily verifiable with a quick web search.

What would normally be a simple trademark dispute, settled behind the scenes and out of the public eye, quickly became much more. It became David versus Goliath, underdog versus The Man. As the Twitter fire spread onto Facebook and beyond, the incident turned into a symbol of everything wrong with corporate culture and overzealous lawyers, a stand-in for every swirly ever inflicted upon the weak and defenseless. There was outrage, anger, disgust, and disbelief. How could a company own something with such meaning to an entire community? How could anyone lay claim to Roubaix?

Fire spreads

The original Café Roubaix story, written by Tom Babin for The Calgary Herald, published to the paper’s website at 7:36 a.m. on Saturday. Moments later, a Google news alert landed in the email inbox of popular race announcer Brad Sohner, who Tweeted “Specialized owns the trademark on the word “Roubaix” and they’re getting aggressive enforcing it,” along with a link to the Herald story, to his 1,300 followers. The single Tweet, posted at 8:20 a.m., was a spark to gasoline.

Within an hour, helped along by re-Tweets from conventional cycling media as well as heaps of other heavily-followed Twitter users, the story was splashed across the feeds of hundreds of thousands of cyclists. Specialized’s Facebook page lit up with negative comments; hundreds would stack up before the company changed the settings to show only its own posts. Even then, the anger simply moved into the comment section of every new post. Calls for a boycott of Specialized products and proposals for a legal fund for Richter and his shop flew in from every corner of the net. There was no escape for the “Big Red S.”

The Roubaix defense

Conspicuously absent throughout the weekend was a thorough response from Specialized, at least beyond the limited comment within Babin’s original story. There, the company defended its trademark, and its right to protect it. “A simple trademark search would have prevented this,” said Larry Koury, managing director of Specialized Canada via email. “We are required to defend or lose our trademark registration.”

Koury is correct in his first statement, that a trademark search would have quickly turned up Specialized’s claim to the Roubaix mark. But does Specialized actually have to take action against those that infringe on its trademark? In a word, no. Except it’s not quite that simple, either.

First, a bit of background. Specialized holds the trademark for Roubaix in Canada; it has since 2007 when its application was approved. It does not hold the Roubaix trademark in the United States. It licenses that mark from Advanced Sports, which has held it since 1990 and used it within its Fuji brand.

It may seem absurd that a commercial entity can hold the trademark on the name of a city in France. In fact, Richter claims he was not aware that a word like Roubaix could be trademarked at all. “I had assumed I could not register Roubaix as a trade mark as it is a geographical location well known in cycling, not to mention the wide-spread use of the term ‘Roubaix’ throughout the industry,” he said in a press release. “I thought I could freely use Roubaix.”

The backlash over the weekend showed that the notion of Specialized owning the Roubaix mark doesn’t feel right to many in the sport. But virtue and the law can be like oil and water. Specialized isn’t alone, either; Trek holds trademarks on Alpe d’Huez, Dolomiti, and even Maillot Jaune.

The Canadian approval process is similar, though not identical, to the one in the United States. To avoid an even longer story, written in legalese, we’ll leave it at this: Three separate intellectual property lawyers contacted by VeloNews have stated unequivocally that Specialized’s trademark is valid. It is legitimate. There is nothing the prevents the company from trademarking the name of a city, even one with an emotional context that is in no way related to a carbon fiber bicycle frame.

It may feel wrong, but it’s the law.

But is it defensible? Would Richter win in court if Specialized followed through? That much is as clear as mud.

Trademark law is largely based on the “standard of likelihood of confusion,” explained intellectual property lawyer and masters racer Jeffrey DiTolla. A trademark has been infringed if a consumer is likely to be confused regarding the source of a product being sold under the mark in question.

By that standard, Café Roubaix could be in trouble. “Under the laws of this country, and under the standard of likelihood of confusion, it might be a tough argument in his case,” said DiTolla. “A reasonable consumer could look at that and say ‘oh, Roubaix bicycle and Roubaix wheels, they must come from the same people.’”

This is not to say that a lawsuit against Dan Richter and Café Roubaix would be a guaranteed success. In fact, “the guy has a good shot at beating this for a variety of technical reasons, the most obvious being that the word has been used by other businesses for a bunch of different products,” said Christopher Beall, trademark and intellectual property litigator with Levine Sullivan Koch and Schulz. “From a trademark point of view, this means the mark is weak. Coke, for example, is a strong mark because there’s only one.”

The fact that Roubaix is a city would help Richter as well. “One of the problems with a geographic term is that lots of people end up using the term, which diminishes the distinctiveness,” Beall said.

Specialized’s public relations team did not respond to a request to clarify the company’s internal trademark enforcement policy. But it is clear that argument put forth by Mr. Kuory, that Specialized must protect its trademark in any circumstance, is weak.

“People accused of infringement often go into court and make the same argument you might make when you get pulled over by the police: that five people just sped by you so why are you the one getting pulled over? Most of the time, the judge will say, ‘What the hell does that have to do with it?’” said DiTolla. “Nobody is required to sue everyone who might infringe, just like a cop doesn’t have to pull over every speeding car to make your speeding illegal.”

The legal outcome of any potential trademark suit is anything but certain. The difficulty for Richter is compounded by the fact that he faces a relative giant, with its own legal department and plenty of cash to throw at the problem. It’s a big ask to send David running into battle with Goliath.

In this case, though, social media has changed the math. Normally, it’s the little guy that has everything to lose. But the backlash on Twitter and Facebook and every other corner of the Internet over the weekend proved that the huge brands like Specialized do indeed have one thing to be scared of: fear itself. It was the erroneous fear of losing a valuable trademark that catalyzed the public flogging of the brand. Specialized damaged its brand by defending its brand.

Is Specialized a bully or bulldog?

“Specialized knows (that) the cost of defending allows them to win,” said lawyer Jim Moss, who specializes in recreational law. “Is this legal bullying? I can’t find that term in Black’s Law Dictionary, but yes.”

Just because Specialized’s trademark is legitimate does not mean it is required to come down like a ton of bricks on a small Canadian bike shop. Legal action in this case is not compulsory. For its own sake, Specialized should have considered the optics, the PR ramifications, of its action.

There are other ways to protect the mark, and lay down some rules in a way that could be beneficial for both parties. “There’s a really easy way to solve this. It’s called a trademark coexistence agreement,” said DiTolla. Essentially, Specialized and Café Roubaix would agree to certain terms — say, Café Roubaix could keep its name but would have to change the branding on the wheels it sells.

Or, Specialized could offer to license the name to Richter. “For $1 or $1000, we’ll license the right to use the name,” said Moss, playing the part of a Specialized lawyer. “If not, we have to sue to protect. We can protect (the mark) if we have a license with you and we can both benefit.”

But Specialized’s legal power acts as a deterrent, and it may see little reason to haggle with small competitors. Even though Richter has a very real chance of winning in court, he claims he can’t afford to take the chance of a loss. Specialized, on the other hand, can easily afford to test the waters.

What it can’t afford, and what it should have foreseen, was the public backlash. The public relations catastrophe is compounded by Specialized’s status as a repeat offender.

Many will recall the aggressive maneuver against boutique bike brand Volagi last year, which brought about similar uproar across the cycling world.

According to one source who requested anonymity due to his position in the cycling industry, Specialized recently threatened to take bike brand NeilPryde to court over its Alize model, which Specialized claimed was too close to its Allez model.

Specialized pursued Mountain Cycle over its use of the name Stumptown, which Specialized felt was too close to its own Stumpjumper. Mountain Cycle changed the name in 2006.

Specialized also forced Epic Designs, a manufacturer of on-bike storage bags, to change its name to Relevate Designs in 2009. Epic Wheelworks was later forced to change its name under the same trademark.

The list goes on. And on.

Specialized holds trademarks for Epic and Stumpjumper and all the rest; those legal maneuvers were completely legitimate within our legal system. But, again, the law lacks nuance; it is rightly unconcerned with underdog stories. The public is not.

Have these incidents harmed the Specialized brand more than they helped protect it?

That’s the million-dollar question.

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