Lululemon sues Costco over sale of alleged knock-offs

Lululemon is accusing Costco of infringing on its intellectual property by selling knock-offs of some of its most popular products.

A lawsuit filed in a California court recently alleges Costco sells "dupes" of Lululemon's Scuba hoodies and sweatshirts, Define jackets and ABC pants.

Some of the alleged fakes Vancouver-based Lululemon identified are sold under Costco's private label Kirkland, but others are made by manufacturers Danskin, Jockey and Spyder.

"Some customers incorrectly believe these infringing products are authentic Lululemon apparel while still other customers specifically purchase the infringing products because they are difficult to distinguish from authentic Lululemon products, particularly for downstream purchasers or observers," the lawsuit says.

Lululemon alleges these scenarios take advantage of patents it holds, as well as the reputation and goodwill it has built with customers.

In its 49-page court filing, Lululemon says it tried to address the dupes by sending Costco cease and desist letters but that it is now asking a court to step in.

Lululemon has requested the matter be heard by a jury trial, which it wants to order Costco to cease manufacturing, importing, marketing and selling the alleged dupes.

It also wants the Washington-based retailer to remove any instances where it was advertising alleged dupes online or in print and is asking the court to require Costco to cover any lost profits Lululemon incurred from the products.

"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," a Lululemon spokesperson told CBC News in an emailed statement.

Costco did not immediately respond to a request for comment. It has yet to file a response to Lululemon's lawsuit.

Elizabeth Dipchand, an intellectual property lawyer and managing partner of Dipchand LLP who is not involved in this case, says she understands why Lululemon has taken legal action. While low-level lookalike and counterfeit products have been around forever, she says usually there isn't so much money at stake.

"[Costco is not a] counterfeit manufacturer from overseas that trickles in counterfeit bags and … shoes and all sorts of other goods. This is a very well-known multinational with significant bricks and mortar affecting the bottom line of another very, very well known higher end and higher priced company," Dipchand said.

The lawsuit also details certain design details of some of their clothing — like the lines across the chest and back of the Define zip up jacket — which Lululemon says are its intellectual property alone.

The striping detail might seem like a small detail to some, but Dipchand says those kinds of signature details mean a lot in the world of intellectual property.