Lululemon Sues Costco Over Alleged Knockoff Apparel Sales

Athletic apparel giant Lululemon has filed a lawsuit against Costco, accusing the retail behemoth of selling inexpensive “dupes” of its high-end pants and sweatshirts. The lawsuit, submitted on Friday in a California court, alleges that Costco has “unlawfully traded” on Lululemon’s “reputation, goodwill, and sweat equity” by offering unauthorized and unlicensed apparel that imitates Lululemon’s designs.

Lululemon claims that its popular ABC men’s pants, priced at $128, have been mimicked by a pair of Costco pants retailing for just $10. Similarly, the company alleges that its $118 Scuba hoodies have been copied by Costco’s Kirkland Signature brand, which sells similar sweatshirts for $8. “As an innovation-led company that invests significantly in the research, development, and design of our products, we take the responsibility of protecting and enforcing our intellectual property rights very seriously and pursue the appropriate legal action when necessary,” Lululemon stated.

Legal Battle and Brand Protection

The lawsuit marks another chapter in Lululemon’s ongoing efforts to protect its brand from alleged copycats. The Vancouver-based company accuses Costco of misleading customers into believing that these dupes, slang for duplicates, are manufactured by the authentic supplier of the original products. Lululemon and Costco have not yet responded to requests for comment on the matter.

In November 2024, Lululemon reportedly sent a letter to Costco, accusing the Washington-based retailer of selling hoodies that infringed on the Scuba design. Although Costco initially removed some of the infringing products, Lululemon claims that similar items have since reappeared on the shelves. The luxury leggings maker is seeking to “fully recover” financial losses through unspecified damages and is asking for a court order to block Costco from selling the products.

Historical Context and Previous Legal Actions

This isn’t the first time Lululemon has taken legal action to defend its designs. In 2021, the company sued stationary bike giant Peloton for allegedly selling apparel with similar designs. That lawsuit was settled in 2022, leading to a five-year partnership between the two companies to sell co-branded clothing. This history of litigation underscores Lululemon’s commitment to safeguarding its intellectual property.

Meanwhile, Lululemon is navigating a challenging economic landscape. The company recently adjusted its full-year forecast, citing a “dynamic macroenvironment” with increased costs from tariffs, reduced demand due to economic uncertainty, and intense competition from other athletic brands. Despite these challenges, Lululemon’s shares saw a 2.2% increase on Tuesday, although the stock remains down 36% for the year.

Expert Opinions and Market Implications

Industry experts suggest that Lululemon’s legal actions highlight a broader trend in the retail sector, where brand protection has become increasingly critical. “In an era where fast fashion and affordable alternatives are gaining traction, luxury brands must be vigilant in protecting their unique designs and market position,” said retail analyst Sarah Thompson.

“As competition heats up, companies like Lululemon are likely to continue pursuing legal avenues to maintain their brand integrity and market share,” Thompson added.

The lawsuit against Costco could set a precedent for how similar cases are handled in the future, potentially influencing how retailers approach the sale of lookalike products. As Lululemon seeks to recover its financial losses, the outcome of this case could have significant implications for both companies and the broader retail industry.

Looking Ahead

As the legal proceedings unfold, the retail industry will be watching closely to see how this high-profile case is resolved. The outcome could shape future interactions between luxury brands and retailers, particularly in terms of intellectual property rights and brand protection.

For now, Lululemon’s lawsuit against Costco serves as a reminder of the ongoing battle between high-end brands and budget-friendly retailers, highlighting the complexities of navigating a competitive and rapidly evolving marketplace.

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