If you’ve walked through a Costco recently, you might have done a double-take. Tucked between the giant bags of coffee and discounted TVs, you may have spotted activewear that looks, well, familiar. Lululemon thinks that certain activewear at Costco are not as they SEAM (the pun will make sense if you skim the complaint):
Lululemon’s Warrior Pose
Lululemon, a titan of high-end athleisure, has officially fired back. In a new lawsuit filed in the Central District of California, Lululemon is accusing wholesale giant Costco of selling a range of “dupes” and “knockoffs” that infringe its trademarks, trade dress, and design patents (along with other state law claims that we won’t get into here).
The complaint reads like a declaration of war in the ongoing battle against fashion dupes, even citing a Washington Post article titled, “Is That Hoodie a Lululemon or a Costco Dupe? No One Has to Know But You.”
Lululemon seems upset. Let’s break down the claims and see if Costco has a legal leg to stand on.
The Battleground: What Products are in the Crosshairs?
This isn’t just about one product. Lululemon is coming out swinging, protecting several of its crown jewels.
- Lululemon’s DEFINE® Jacket: Famous for its flattering, body-contouring seams:
- Lululemon’s SCUBA® Hoodie: The ubiquitous oversized hoodie with its unique kangaroo pocket and seam details:
- Lululemon’s ABC Pants: The “Anti-Ball Crushing” pants known for their specific gusset design and four-way stretch fabric:
- Lululemon’s TIDEWATER TEAL™ Color: A specific shade of teal Lululemon uses on many products (not registered, but they filed a trademark application for this phrase on June 26th).
Lululemon’s Arsenal: Breaking Down the IP Claims
Lululemon built a multi-pronged attack using different types of intellectual property, some registered, some instead relying on “common law” rights:
- Trade Dress (The “Look and Feel” and Unregistered Trade Dress): This is the heart of the case. Trade dress protects the overall visual appearance of a product that signals its source to consumers. Think of the shape of a Coca-Cola bottle. To win, Lululemon has to prove three things: the design is non-functional, it’s distinctive (meaning consumers associate the look with Lululemon), and Costco’s products create a likelihood of confusion. This case was filed in the good ol’ Ninth Circuit, so we will use the Sleekcraft Factors:
- Strength of the trademark
- Proximity of the goods/services
- Similarity of the trademarks
- Evidence of actual confusion
- Marketing channels used
- Degree of care exercised by consumers
- Intent of the defendant
- Likelihood of market expansion
- Design Patents (The Ornamental Design): Separate from trade dress, Lululemon also holds design patents on its SCUBA® hoodie designs. Unlike trade dress, a design patent protects the novel, ornamental look of a product, period. The test is simple: would an “ordinary observer” be deceived into thinking Costco’s product is the same as the patented design? Patents are powerful weapons, and Lululemon has put them front and center.
- Trademarks (The Names and Registered Trade Dress): This is more straightforward.
Can Costco ~Stitch~ Together a Rule 12(b)(6) Motion?
So, what can Costco do? Their first move will likely be a Motion to Dismiss for Failure to State a Claim under Federal Rule of Civil Procedure 12(b)(6). In plain English, this motion argues: “Even if we assume everything Lululemon says in its complaint is true, they still haven’t met the minimum legal requirements to bring this lawsuit.”
It’s a high bar for Costco to clear, but here’s where they might focus their attack:
The Common Law Trade Dress Claims (SCUBA Hoodie & ABC Pants):
This is Costco’s most fertile ground. They will argue that the features Lululemon claims as trade dress—like the shape of a pocket, the placement of seams, or the use of a stretchy fabric—are functional. Functionality is an absolute defense to trade dress infringement. Costco will contend these elements aren’t just for looks; they make the garments more comfortable, durable, or better for athletic activity. If a feature is functional, competitors are free to use it. Lululemon anticipated this, including pictures of other jackets and pants that function perfectly well without their specific designs. Still, this will be a key battle.
The TIDEWATER TEAL™ Trademark:
This is arguably Lululemon’s weakest claim. Costco has a strong argument that “Tidewater Teal” is either a generic description of a color or, at best, that Lululemon hasn’t plausibly alleged that this specific color name has acquired the necessary secondary meaning to function as a trademark for apparel. Proving that a color name (let alone the color itself) has become a source-identifier is incredibly difficult. Costco could argue that its vendor was simply using the term descriptively. This claim might be vulnerable to a 12(b)(6) motion.
Plausibility of Secondary Meaning:
For the unregistered trade dress claims, Costco could argue that Lululemon’s allegations of secondary meaning are just “conclusory.” While Lululemon did a very thorough job pleading facts (long use, unsolicited media, celebrity use), Costco will try to pick it apart, arguing that none of it plausibly leads to the conclusion that consumers identify the design itself, separate from the logo, with Lululemon. This is a tough argument for Costco to win at this early stage, as Lululemon’s complaint is quite detailed.
Lurking Prior Art against the Design Patents.
Designs have to meet all statutory requirements of novelty and non-obviousness (among others) to earn patent protection. Speaking from experience, there is ALWAYS prior art for apparel you can stitch together to invalidate a design patent, but it might be a trick to get without time for discovery. We also might learn of a prior disclosure by Lululemon to invalidate their own design patents. Time will tell.
What’s Unlikely to Be Dismissed?
The Design Patent Claims:
These are almost certainly safe from a 12(b)(6) motion. Lululemon pled ownership of specific patents and identified the specific products they believe infringe. The complaint includes side-by-side images. This is a textbook, well-pled patent infringement claim that will survive to the next stage — unless Costco has some killer prior art already in its holster.
The Registered Trade Dress & Trademark Claims: T
he DEFINE Jacket trade dress and SCUBA word mark are registered with the USPTO. This registration gives Lululemon a powerful presumption of validity. Given that Lululemon has clearly identified the allegedly infringing products, it’s highly improbable a court would dismiss these claims at the outset.
The Bottom Line
Lululemon came to this fight prepared. Their complaint is detailed, aggressive, and strategically built on multiple forms of IP. While Costco has viable arguments to challenge the unregistered trade dress and color mark claims, the registered IP and design patent claims are built on a much firmer foundation.
The entire case is unlikely to be dismissed outright. Get ready for a protracted battle that will likely move past the initial motions and into the expensive and revealing discovery phase. For brands, it’s a masterclass in how to build and defend an IP portfolio. For consumers, it’s a front-row seat to the high-stakes war on dupes. We’ll be watching while eating those delicious hot dogs.
