Lululemon is suing Costco over selling knockoff versions of its famous athleisure wear, according to Lululemon’s lawsuit filed in the U.S. District Court for the Central District of California. The Canadian-American athletic apparel retailer claims that Costco’s products violate Lululemon’s intellectual property rights and harm their reputation and goodwill.
Lululemon says they have taken steps to remove these products from the market by sending cease and desist letters to companies — including to Costco — that advertise or sell knockoffs.
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Brand reputation and design infringement
“Costco has unlawfully traded upon plaintiffs’ reputation, goodwill and sweat equity by selling unauthorized and unlicensed apparel employing knockoff, infringing versions of plaintiffs’ well-known trade dress and design patents (the ‘infringing products’) and to recover fully for the monetary damages and significant harm to Lululemon’s brands and reputation caused by defendant,” Lululemon’s lawsuit states.
Lululemon alleges that these Costco items infringe on their design rights to three products: ABC pants, a men’s line known for comfort and stretch; Define jackets, a fitted, athletic jacket style; and Scuba zip-ups and hoodies, which are oversized sweatshirts.
Consumer confusion alleged
Lululemon claims that Costco is violating trademark laws and misleading customers into thinking that the Costco brand Kirkland “dupes” are actually made by Lululemon itself or by the same supplier. This could confuse customers and hurt Lululemon’s brand and reputation, the athleisure company claims.
“Indeed, one of the purposes of selling ‘dupes’ is to confuse consumers at the point-of-sale and/or observers post-sale into believing that the ‘dupes’ are plaintiffs’ authentic products when they are not,” the lawsuit states.
Pricing comparison
In the lawsuit, Lululemon points out that its Scuba hoodie, which costs $118, has a very similar-looking version being sold at Costco for around $20. This drastic price difference is being used by Lululemon to support its claim that Costco is copying its designs, potentially harming its brand by offering cheap lookalikes.
A company spokesperson for Lululemon told CBS MoneyWatch, “We take the responsibility of protecting and enforcing our intellectual property rights very seriously and pursue the appropriate legal action when necessary.”
Seeking damages and jury trial
Lululemon is seeking monetary damages to compensate for lost sales, brand damage, or other financial harm and demanding a jury trial.
Costco has not yet publicly commented on the lawsuit. In 2022, Lululemon reached a settlement in its lawsuit against Peloton concerning Peloton’s women’s apparel line.
