Initially they worked in tandem, now they’re in an e-bike patent suit

Grenoble-based eBikeLabs, a French startup that has been doing work on embedded computer software for electric bikes, is suing Cowboy for patent infringement and, additional normally, copying eBikeLabs’ technologies in its newest function, AdaptivePower. Cowboy, the Belgian electric bicycle manufacturer, has refuted all the allegations and even stated that eBikeLabs is managing a smear marketing campaign.

There have been other individuals tracking this saga. Now, TechCrunch has gained some new information about a meeting that took area in between the two providers on February 2022. In this assembly, executives from equally firms focus on eBikeLabs’ intellectual residence system and eBikeLabs’ implementation of its area adaptation algorithm.

This is a messy tale about a organization marriage that fell apart between a modest startup that does not have deep pockets and a well-liked shopper manufacturer that needs to shield its track record.

An unique partnership

eBikeLabs has been all over given that 2015. The company 1st started with an formidable undertaking: it preferred to construct its have electrical bicycle hardware controller that could be leveraged by many electric powered bike companies. Whilst the startup secured a public grant from the French ecosystem and strength agency (ADEME) to produce it, that product or service never ever truly took off. eBikeLabs produced two proofs of concept but it under no circumstances resulted in substantial scale business agreements.

Much more just lately, eBikeLabs determined to pivot and target completely on the computer software part of the e-bicycle controller. The firm would then husband or wife with controller makers to carry their firmware and program stack to present components. The corporation believed this approach would work especially effectively with newcomers in the e-bike market, these kinds of as providers doing work on manage units for the automotive sector and looking for new segments.

In 2021, eBikeLabs lifted €1 million in an fairness crowdfunding campaign. That very same 12 months, Cowboy and eBikeLabs signed a wide-reaching deal, and eBikeLabs’ co-founder and CEO Maël Bosson sent an e-mail (seen by TechCrunch) to the company’s shareholders who participated in the crowdfunding campaign.

This is how Maël Bosson described the contract at the time:

“We have been in a position to build a number of connected contracts that are now all set for signature:

• a enhancement settlement bringing us €930k in revenue by December 2022,
• A deployment arrangement for 50,000 bikes (or at the very least all Cowboy V5 bikes to be released in 2023),
• A connect with choice on 100% of eBikeLabs shares valid until finally December 2022, i.e. the chance for Cowboy to buy all the company’s shares, together with all those of Wicap [Wicap eBikeLabs is the special purpose vehicle created by the crowdfunding platform Wiseed to let people invest in eBikeLabs].”

Following this shift, eBikeLabs became an outsourced exploration and progress group for Cowboy as there have been some demanding exclusivity clauses on eBikeLabs’ facet — with this agreement, eBikeLabs experienced only a person customer and one particular monetary lover. Soon immediately after that, eBikeLabs laid off its income and marketing workforce thanks to the Cowboy deal.

eBikeLabs started off doing work on the controller firmware for the subsequent generation of Cowboy bikes. The most important gain with customized-designed firmware is that eBikeLabs could launch application functions for the drivetrain.

In unique, eBikeLabs had been doing the job on a discipline adaptation algorithm. With this engineering, the controller quickly adjusts the ability amount of the motor dependent on the recent slope or wind problems. For instance, if you are biking uphill, the rider instantly gains excess ability so that it does not feel more challenging.

The break up and the release of AdaptivePower

Then, at some level in 2022, Cowboy terminated the contract with eBikeLabs. There could be quite a few causes why the romance ended. When eBikeLabs experienced to operate exclusively with Cowboy, there was no exclusivity contract on the other aspect. Cowboy was free to do the job on other projects internally or with other suppliers. If Cowboy wasn’t content with eBikeLabs’ progress, it could decide not to shift ahead with eBikeLabs.

At the identical time, the startup funding environment has modified significantly from 2021 to 2022. Cowboy, driving significant on the soaring curiosity among the shoppers and cities in Europe for more eco-friendly mobility in the course of Covid-19, raised $80 million close to the end of 2021, with its buyers together with the likes of Index Ventures and Tiger International. Rapidly forward to these days, however, and it is develop into significantly harder to elevate substantial rounds like that in modern months.

In 2022, Cowboy created €41 million in income and income grew by 2.7x in comparison to 2021 with 20,000 bikes offered in 2022 alone. And yet, Cowboy might have recognized that attaining eBikeLabs would be an costly go in the recent ecosystem.

When Cowboy raised its most recent funding round in March of this yr, it was getting carried out on a lot tougher terms. Less than €15 million came from VC resources, and to get that expenditure, Cowboy experienced to reduced its valuation by 44% — PitchBook indicates that this transaction was made at a valuation below $200 million but the e-bicycle maker has not confirmed the figures. That round was completed with an fairness crowdfunding spherical of €1.5 million.

Just after ending the agreement with eBikeLabs, the electric bicycle maker experienced two solutions. If it nevertheless needed to perform with eBikeLabs, it could get started negotiating a new agreement with eBikeLabs to license eBikeLabs’ technological know-how, or it could throw away all of eBikeLabs’ function and part methods.

As an alternative, in March 2023, Cowboy did some thing else: it introduced a application update with a new aspect named AdaptivePower. As I wrote at the time, AdaptivePower “automatically adjusts the power of the motor dependent on the latest slope and weather conditions disorders.”

Rather of which includes + and – buttons to modify the electricity of the motor, Cowboy automatically boosts and decreases the electric power shipping of the electric motor dependent on external factors.

AdaptivePower is at the centre of the two companies’ dispute. In accordance to eBikeLabs, Cowboy is reusing some of eBikeLabs’ technological innovation. According to Cowboy, eBikeLabs is running a smear marketing campaign.

“We resolved to sue Cowboy for patent infringement, infringement of our know-how and unfair levels of competition,” eBikeLabs CEO Maël Bosson wrote in an e mail despatched to the company’s shareholders final month and seen by TechCrunch.

When Cowboy produced AdaptivePower, the company’s co-founder and CTO Tanguy Goretti posted a concept on LinkedIn and said “I’m super happy of the group powering that project.” He then shown 16 names and all of them at present do the job or a short while ago labored for Cowboy.

Which is why the corporation made a decision to sue eBikeLabs for disparagement. “Cowboy refutes all the allegations designed by eBikeLabs in their leaked email and need to a formal go well with be brought, will be formally challenged by Cowboy,” a Cowboy spokesperson reported in an emailed assertion.

The messy environment of mental property

So what took place precisely? It’s difficult to say except you’re a patent expert or an mental home lawyer. According to Journal du Geek, Cowboy despatched a letter to eBikeLabs’ lawyers on April 11, 2023. The business claims that Cowboy’s technologies experienced been designed independently from that of eBikeLabs.

Though eBikeLabs submitted a patent in January 2022, it hasn’t nonetheless been revealed by the French administration in cost of intellectual home (INPI). This can commonly get 18 months.

On the other hand, Cowboy was nicely mindful that eBikeLabs experienced submitted a patent for the field adaptation algorithm. The Cowboy workforce was provided an early opportunity, in advance of February 2022, to take a look at that characteristic on Cowboy bikes.

In February 2022, eBikeLabs shared its fourth progress report about the company’s work for Cowboy. Executives functioning for equally corporations structured a Zoom meeting to go over the report. That assembly was recorded and TechCrunch realized about the information of the assembly from a reliable supply.

When speaking about the discipline adaptation algorithm, eBikeLabs’ CTO Colin Valière said “this is truly a person of the most important features expected in the [Cowboy 5]. It is by now up and operating. Of study course, there is substantially work to do prior to it is totally last, but we have analyzed it again currently and it performs.”

“You mentioned patents there, could you a bit clarify your safety tactic?” Cowboy co-founder and components director Karim Slaoui asked moments afterwards.

“Yes, so we applied for a 1st patent for this know-how,” eBikeLabs CEO Maël Bosson mentioned. He then said that it is rather complicated to make it operate reliably as the information from the controller is not constantly accurate. He also pointed out that it is quite complicated to get an intuitive ride feeling. “Our method was to protect this way of performing [it] due to the fact we imagine it is the finest way to do it, intuitive[ly], which is of system of quite superior price.”

Laurent Etorre, Cowboy’s Engineering Undertaking Manager for the powertrain, then requested a stick to-up query about eBikeLabs’ patent technique. “I have a person concern about the patent. Would it be straightforward to detect any infringement? Simply because a single of the issues of the patent is to be in a position to demonstrate that there is an infringement,” he claimed.

“If you are a competitor and you want to try out to do a little something related, and you see that someone has patented it, you may well believe that you will not get started simply because you will have a large chance,” Bosson answered.

Past 7 days, Maël Bosson, the co-founder and CEO of eBikeLabs, sent the following statement to TechCrunch about this assembly:

“We won’t remark on Cowboy, presented the ongoing authorized dispute.

All I can say is that this video is a ideal case in point of how eBikeLabs collaborates with its consumers. We share details about our algorithms in a pretty open and transparent way, in the form of presentations and examination rides. Our IP system is also to be completely transparent about the existence and scope of our patent applications.

This tactic allows us to manage our products roadmap as intently as feasible to our customers’ expectations. We assistance them get the very best out of eBikeOS, our inventions and our know-how. This is in our ideal fascination, due to the fact eBikeLabs’ accomplishment relies upon on the accomplishment of its consumers.”

What is subsequent

The two corporations are jeopardizing a large amount with these lawsuits as the stress is serious for all of the more recent entrants in the e-bike market — Cowboy and eBikeLabs provided.

Though Cowboy is a even bigger company than eBikeLabs, the electric powered bike field is significantly larger than these two corporations. In accordance to the Confederation of the European Bicycle, E-Bicycle, Parts & Accessories Industries, there were 5 million e-bikes bought in Europe in 2021.

In addition to present bicycle firms now promoting e-bikes (Trek, Big, and many others.), there are a number of new entrants hoping to seize some industry share in this expanding marketplace, these kinds of as VanMoof, Moustache and Rad Ability Bikes.

Cowboy and VanMoof in specific have positioned on their own as technological know-how corporations and elevated money from startup VC cash. VanMoof — the Dutch startup that will make bikes with a smooth design and style that lots of persons confuse with Cowboy’s — in reality holds the title at this time for elevating the biggest single funding spherical to day in the e-bike area. That was also in those people heydays of 2021.

On the one particular hand, Cowboy wants to steer clear of lousy publicity. It is a larger and much better identified organization than eBikeLabs. Cowboy may well even believe that eBikeLabs is hoping to make a identify for on their own at Cowboy’s price.

On the other hand, eBikeLabs took a radical determination when it signed an exclusivity deal with Cowboy. It has nonetheless to produce meaningful income and it even ideas to raise some new funding through yet another equity crowdfunding campaign in the coming weeks. The startup will also encounter aggressive force from larger e-bicycle motor suppliers, these types of as Bosch and Shimano. eBikeLabs could operate out of time and options quicker somewhat than afterwards.

Which is why it’s going to be interesting to see what is heading to occur in the coming weeks: time is revenue, so both businesses will probably want to take care of the situation as quickly as doable.