Lululemon Vs. Costco Dupe Lawsuit: Understanding The Legal Battle

Lululemon store. Credits: Unsplash.

Lululemon sued Costco over the sale of dupes. A dupe is a product that mimics a more expensive item's look and feel to capitalise on its reputation, without necessarily copying the brand name.

This dispute is one of a series of recent altercations involving brands against private labels. These brands, which tend to have the strongest reputations in their field and are often therefore copied, are finding that cheaper alternatives are harming their bottom line, as retailers offer dupe products that copy elements of the branded goods.

The case filing came ahead of Lululemon securing a trademark for Lululemon Dupe. Together these steps highlight the difficulties that brands face when taking steps to enforce or protect their intellectual property rights, particularly as any step taken provides a level of publicity to the business providing the dupe.

The US dispute focuses on trade dress infringement and Lululemon’s argument that Costco is misleading consumers into thinking that the relevant products are that of Lululemon. The claim sets out that Costco is unfairly trading on the “reputation, goodwill, and sweat equity by selling unauthorised and unlicensed apparel”.

For reference, the Lululemon Scuba hoodie sells for 118 dollars, whereas the Costco “dupe” retails at around eight dollars.

This claim is similar to a claim under English law of passing off. Such cases are notoriously difficult to win on the basis that claimants have to show that there has been a misrepresentation or deception on the consumer. Instead, brand owners have sought to rely on registered trademarks to protect their assets.

This is not an option for Lululemon as the elements that have been copied are arguably not related to the brand, but rather the style of the garments.

The rise of dupes: Brand owners seek control over reputation

Interestingly, the Lululemon vs. Costco dispute raises questions about the intention of Costco’s dupe activity, as this has been a persuasive factor in other similar US disputes. The intention element of infringing actions had previously been considered by the Court of Appeal in cider brand Thatchers’ case against supermarket chain Aldi, having ultimately swayed the decision in favour of the brand owner. By showing the intention behind the dupe, the courts were more likely to find that there had been unfair advantage taken against the trademark.

This US lawsuit comes at a time when in the UK we have had two recent court judgements which are considered favourable to brand owners seeking to combat dupes. The decision in Iconix vs. Dream Pairs (relating to Umbro football boots) and Thatchers vs. Aldi (relating to lemon cider) both highlight how a court may approach the Lululemon dispute, had the issues arisen in the UK.

It will be interesting to see if Lululemon has the success that British brand owners have had this year. In Thatchers' case, the cider company was able to show that Aldi had infringed its registered trademark on the basis that it had taken an unfair advantage, in part because Aldi had achieved relatively high sales without any evidence of spending on marketing.

For Iconix, the Supreme Court, although ultimately ruling against Iconix, held that the post-sale context was relevant when making a determination on the similarity of signs (and if so, the degree of similarity) in addition to determining the likelihood of confusion.

If the Lululemon vs. Costco dispute was happening in the UK, the court may well consider if Costco had invested in sufficient marketing to achieve its sales and it could take into account how the relevant clothing items looked after being bought in store. One factor in the Iconix and Thatchers’ cases is that they related to very particular registered trademarks, rather than design elements of clothing.

It will be interesting to see how this case goes… As consumers seek out cheaper alternatives, brand owners must ensure the elements of their products that make them unique and distinctive are protected. This is easier said than done when it comes to leggings.