Canadian athleisure brand Lululemon is taking legal action against Costco, accusing the retail giant of selling counterfeit versions of its high-end clothing.
In a lawsuit filed on Friday, Lululemon claims that Costco has been benefitting from the brand’s reputation and hard-earned market value by offering unauthorized versions of its clothing at a fraction of the price.
The Vancouver-based retailer alleges that Costco’s knockoff items, which include the company’s bestsellers like the popular SCUBA® hoodies and sweatshirts, DEFINE® jackets, and ABC pants, are intentionally designed to mislead customers into thinking they are made by Lululemon’s original suppliers.
The 49-page lawsuit, filed in California, highlights the design similarities between Lululemon’s signature pieces and Costco’s private-label line Kirkland as well as other third-party retailers sold by the warehouse, along with the significant price differences. For instance, Lululemon’s Scuba hoodie, priced at $118, is compared to Costco’s version, which sells for only around $8.
While Costco has yet to comment on the matter publicly, Lululemon issued a statement saying it is committed to protecting its intellectual property. According to media reports, it says 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.”
COSTCO SHOULD KNOW BETTER, EXPERT SAYS
Toronto Metropolitan University professor and retail expert Daniel Tsai says while the structure of clothing cannot be patented, Lululemon’s accusation of Costco selling these “dupes” to deceive consumers into believing they are purchasing authentic products is something that could hold up in court.
“There’s no copyright in clothing shapes. In other words, you can’t copyright a pair of underwear or a piece of clothing that has two holes in it and you stick your legs through it,” Tsai explained to Now Toronto on Wednesday.
“The issue comes down to the customer being confused… to think that the product you’re selling is the legitimate thing, such as Lululemon products being offered in a Costco store.”
Tsai says the accusation is a serious one to make, and was likely pursued after calculating major financial damages caused by the counterfeit sales.
“Costco should know better,” Tsai emphasized. “Being a major brand and multinational corporation, they should know better to ensure the products they sell don’t cross the line.”
Lululemon is now seeking full financial compensation for its alleged losses, along with a court order to stop Costco from selling the disputed items.
