Protecting your intellectual property is always in style, just ask Lululemon! In this week's BL Business Branding entry, we explore the high-profile legal battle shaping up between the elite athleisure brand and warehouse giant Costco. Read about the lawsuit here, and stay tuned for our upcoming podcast for an even closer look at what's at stake for both companies as they now face off in court.
There is a fine line between competition and counterfeits when it comes to fashion. With businesses constantly vying for more space in consumers' shopping carts, where does the law define the limit of drawing inspiration from a competitor versus creating an unauthorized imitation? Lululemon is asking the Central District of California to help enforce that boundary against a surprise fashion competitor – Costco Wholesale.
Lululemon Athletica has filed a lawsuit accusing Costco of trademark infringement, trade dress infringement, patent infringement and unfair competition in California for allegedly selling dupes of some of Lululemon's most popular products. Specifically in question are Lululemon's SCUBA hoodies and sweatshirts, DEFINE jackets, ABC pants, and TIDEWATER TEAL mark. Lululemon claims Costco "is known to use manufacturers of popular branded products for its own KIRKLAND® 'private label' products," which contributes to consumer confusion regarding the origin and authenticity of Costco's products. Although the Costco-sold products cited in the lawsuit do not feature Lululemon's logo, the company claims that the design choices on the products, such as ornamental lines, are so similar to the athleticwear giant's distinctive, trade protected designs, that they are unlicensed and unlawful recreations of Lululemon's signature products.
Lululemon wants to prevent Costco from producing, selling or advertising any products that are "identical or confusingly similar" to Lululemon's, and to order Costco to pay Lululemon for lost profits and "reasonable royalty" fees. Costco has not yet responded to the lawsuit at the time of this newsletter's publication.
What Can Businesses Learn From This?
This lawsuit bears a striking similarity to a past newsletter covering a similar dispute between Benefit Cosmetics and e.l.f. regarding a mascara dupe. In that case, Benefit lost because it could not prove actual confusion among consumers, despite the striking similarities between the products in question. Lululemon could face a similar uphill battle as this case moves forward, and faces a serious threat to its business.
In the lawsuit, Lululemon alleges that Costco's "actions are likely to cause confusion ... and deception among consumers." However, without actual evidence of consumers being misled into buying the wrong product, trade dress infringement may be a difficult claim to prove. Conversely, by securing various intellectual property protections for different products through trademarks and patents, Lululemon has diversified the ways it can try to protect its unique fashion elements from competitors. When it comes to protecting a company's IP, utilizing such an approach can help create a more robust defense for maintaining control of what makes your company unique when competitors come knocking. Costco now will fight a serious battle to protect its products, which will have serious consequences for its business and cash flow.
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