Grenoble-based eBikeLabs, a French The startup that’s working on embedded software for electric bikes is suing Cowboy for patent infringement, and generally, copying eBikeLabs’ technology in its latest feature, AdaptivePower. Belgian electric bike maker Cowboy has denied all the allegations and even said that eBikeLabs is running a smear campaign.
There are others tracking this saga. Now, TechCrunch has received some new details about a meeting between the two companies on February 2022. In this meeting, executives from both companies discuss eBikeLabs’ intellectual property strategy and the implementation of eBikeLabs’ own region optimization algorithm.
It’s a messy tale of a business relationship torn apart between a small startup that doesn’t have much money and a popular consumer brand that wants to protect its reputation.
an exclusive partnership
eBikeLabs has been around since 2015. The company first started with an ambitious project: it wanted to create its own electric bike hardware controller that could be leveraged by multiple electric bike manufacturers. While the startup received a public grant from the French Environment and Energy Agency (ADEME) to develop it, that product never actually took off. eBikeLabs developed two proofs of concept but these never resulted in large scale commercial agreements.
More recently, eBikeLabs decided to pivot and focus exclusively on the software part of the e-bike controller. The company will then partner with controller makers to bring its firmware and software stack to existing hardware. The company thought this strategy would work especially well with newcomers to the e-bike industry, such as companies working on control units for the automotive industry, and those looking to enter new segments.
In 2021, eBikeLabs raised €1 million in an equity crowdfunding campaign. That same year, Cowboy and eBikeLabs signed a wide-reaching contract, and eBikeLabs co-founder and CEO Mel Bosson sent an email (seen by TechCrunch) to the company’s shareholders participating in the crowdfunding campaign.
This is how Mel Bosson described the contract at the time:
“We have been able to develop a number of connected contracts that are now ready for signature:
- A development agreement to bring in €930k in revenue by December 2022,
- a deployment agreement for 50,000 bikes (or at least all Cowboy V5 bikes to be released in 2023),
- A call option on 100% of eBikeLabs shares is valid until December 2022, meaning Cowboy has the possibility to buy all of the company’s shares, including Wicap’s. [Wicap eBikeLabs is the special purpose vehicle created by the crowdfunding platform Wiseed to let people invest in eBikeLabs],
After the move, eBikeLabs became an outsourced research and development group for Cowboy as there were some strict exclusivity clauses in favor of eBikeLabs – with this contract, eBikeLabs only had one customer and one financial partner. Shortly thereafter, eBikeLabs laid off its sales and marketing team due to the Cowboys contract.
eBikeLabs has started working on the controller firmware for the next generation of cowboy bikes. The main advantage with custom-built firmware is that eBikeLabs can release software features for the drivetrain.
Specifically, eBikeLabs was working on a region optimization algorithm. With this technology, the controller automatically adjusts the motor’s power level based on the current slope or wind conditions. For example, if you’re cycling uphill, the rider automatically gets extra power so it doesn’t feel as hard.
Breakup and the Release of Adaptive Power
Then, sometime in 2022, the Cowboys terminated the contract with eBikeLabs. There can be many reasons for the end of a relationship. While eBikeLabs was to work exclusively with Cowboy, there was no exclusivity contract with the other side. Cowboy was free to work on other projects internally or with other suppliers. If Cowboy was not happy with eBikeLabs’ progress, he could decide not to move forward with eBikeLabs.
At the same time, the startup funding environment has changed significantly from 2021 to 2022. Cowboys, riding on growing interest among consumers and cities in Europe for more eco-friendly mobility during Covid-19, has raised $80 million in late 2021, with investors such as Index Ventures and Tiger Global. Fast forward to today, however, and it has become much more difficult to mount such large tours in recent months.
In 2022, Cowboy will generate €41 million in revenue and sales will increase 2.7 times compared to 2021, with 20,000 bikes sold in 2022 alone. And yet, Cowboy may have realized that acquiring eBikeLabs would be an expensive move in the current climate.
When the Cowboys raised their most recent funding round in March of this year, it was being done on very tough terms. Less than €15 million came from VC funds, and to get that investment, Cowboy had to reduce its valuation by 44% – PitchBook indicates that this transaction was done at a valuation of less than $200 million but E-Bike The figures have not been confirmed by the manufacturer. That round was completed with an equity crowdfunding round of €1.5 million.
After terminating the contract with eBikeLabs, the electric bike maker had two options. If it still wants to work with eBikeLabs, it can begin negotiating a new contract with eBikeLabs to license eBikeLabs’ technology, or it can spin off all and part of eBikeLabs’ work. .
Instead, in March 2023, Cowboy did something else: It released a software update with a new feature called AdaptivePower. As I wrote at the time, AdaptivePower “automatically adjusts motor power based on current slope and weather conditions.”
Instead of including + and – buttons to adjust the motor’s power, the Cowboy automatically increases or decreases the electric motor’s power delivery based on external factors.
AdaptivePower is at the center of a dispute between the two companies. According to eBikeLabs, the Cowboy is reusing some of eBikeLabs’ technology. According to Cowboy, eBikeLabs is running a smear campaign.
“We decided to sue Cowboy for patent infringement, infringement of our know-how and unfair competition,” wrote eBikeLabs CEO Mael Bosson in an email sent to the company’s shareholders last month and seen by TechCrunch.
When Cowboy released AdaptivePower, Tangi Goretti, the company’s co-founder and CTO, posted a message on LinkedIn saying, “I’m very proud of the team behind that project.” He then listed 16 names and all of them currently or recently worked for the Cowboys.
So the company decided to sue eBikeLabs for libel. “Cowboy denies all of the allegations made by eBikeLabs in its leaked email and should a formal lawsuit be brought, it will be formally challenged by Cowboy,” a Cowboy spokesperson said in an emailed statement.
The dirty world of intellectual property
So what happened after all? It’s hard to say unless you’re a patent expert or an intellectual property attorney. According to Journal Du Geek, Cowboy sent a letter to eBikeLabs’ lawyers on April 11, 2023. The company says that the Cowboy’s technology was developed independently from eBikeLabs.
While eBikeLabs filed a patent in January 2022, it has not yet been published by the French Administration of Intellectual Property (INPI). This can usually take up to 18 months.
However, the Cowboys were well aware that eBikeLabs had filed a patent for the region optimization algorithm. The Cowboys team was given an early chance to test that feature on Cowboy bikes, before February 2022.
In February 2022, eBikeLabs shared its fourth progress report about the company’s work for Cowboy. Officials of both the companies organized a zoom meeting to discuss the report. That meeting was recorded, and TechCrunch learned about the contents of the meeting from a reliable source.
When talking about the region optimization algorithm, Colin Vallier, CTO of eBikeLabs, said, “It’s actually one of the main features to look forward to. [Cowboy 5], It is already running. Of course, there’s a lot of work to do before this is fully finalized, but we tested it again today and it works.
“You mentioned patents there, can you explain your security strategy a bit?” Karim Saloi, Cowboy’s co-founder and director of hardware, asked moments later.
“Yes, that’s why we applied for the first patent for this technology,” said Mel Bosson, CEO of eBikeLabs. He then added that it is quite difficult to make it work reliably because the data from the controller is not always accurate. He also mentioned that it is quite difficult to feel comfortable riding. “Our strategy was to protect in such a way [it] because we believe it’s the best way to do it, intuitive[ly]Which is definitely worth a lot.
“I have a question about patents. Would it be easy to find an infringement?” Laurent Ettore
Laurent Ettore, Cowboy’s engineering project manager for powertrains, then asked a follow-up question about eBikeLabs’ patent strategy. “I have a question about patents. Will it be easy to detect an infringement? Because one of the difficulties of patents is being able to prove that infringement has occurred,” he said.
“If you’re a competitor and you want to try something similar, and you see someone has patented it, you might think not to start because you’ll have a higher risk,” Bosson. replied.
Last week, Maël Bosson, co-founder and CEO of eBikeLabs, sent the following statement to TechCrunch about the meeting:
“Due to the ongoing legal dispute, we will not be commenting on the Cowboys.
All I can say is that this video is a perfect example of how eBikeLabs collaborates with its customers. We share information about our algorithms very openly and transparently in the form of presentations and test rides. Our IP strategy is also to be completely transparent about the existence and scope of our patent applications.
This approach enables us to manage our product roadmap as closely as possible to our customers’ expectations. We help them get the best out of eBikeOS, our inventions and our knowledge. This is in our best interest, as the success of eBikeLabs depends on the success of its customers.”
what will happen next
Both companies are taking a lot of risk with these lawsuits because the pressure is real for all new entrants in the e-bike industry – Cowboys and eBikeLabs included.
While Cowboy is a bigger company than eBikeLabs, the electric bike industry is much bigger than either of these companies. According to the Confederation of the European Bicycle, E-Bike, Parts and Accessories Industry, 5 million e-bikes are expected to be sold in Europe in 2021.
In addition to existing bicycle companies now selling e-bikes (Trek, Giant, etc.), several new entrants are trying to capture some market share in this growing market, such as VanMoof, Mustache, and Rad Power Bikes.
Cowboy and VanMoof in particular have positioned themselves as technology companies and raised money from startup VC funds. VanMoof — the Dutch startup that makes bikes with a sleek design that many confuse with cowboys — actually holds the title for raising the largest single funding round in the e-bike space to date. That too in those golden days of 2021.
On the one hand, Cowboy wants to avoid bad publicity. This is a bigger and better company than eBikeLabs. Cowboys may also think that eBikeLabs is trying to make a name for itself at Cowboy’s expense.
On the other hand, eBikeLabs made a revolutionary decision by signing an exclusivity contract with Cowboys. It is yet to generate meaningful revenue and it also plans to raise some fresh funding through another equity crowdfunding campaign in the coming weeks. The startup will also face competitive pressure from big e-bike motor makers like Bosch and Shimano. eBikeLabs’ time and options may soon run out.
So it will be interesting to see what happens in the coming weeks: time is money, so both companies will want to settle this matter as quickly as possible.