Lululemon vs Costco Dispute Filed in California
On 27 June 2025, Lululemon Athletica Canada Inc. and Lululemon USA Inc. filed a lawsuit against Costco Wholesale Corporation in the United States District Court for the Central District of California. The claim alleges that Costco has imported, marketed and sold garments that imitate the protected design features, trade marks and patented elements of Lululemon’s SCUBA hoodies, DEFINE jackets and ABC pants. Lululemon argues that these garments are lookalike versions sold at lower prices, taking unfair advantage of its brand recognition and design investment. The suit is the latest move by Lululemon to enforce its intellectual property rights against so-called “dupes” products marketed or perceived as lower-cost lookalikes of its original designs.
Background on the Parties
Lululemon, founded in Vancouver in 1998, is widely known for its premium athletic and lifestyle apparel. Its core product lines include the SCUBA hoodies, DEFINE jackets and ABC pants, which combine technical fabrics with distinctive styling that Lululemon says customers recognise as signifying its brand. Over the years, Lululemon has invested heavily in developing unique design elements and protecting them through registered trade marks, design patents and trade dress rights.
Costco Wholesale Corporation is one of the largest retail chains in North America, operating a membership-based warehouse model. It sells branded goods alongside a substantial volume of private label and unbranded products, including clothing. According to Lululemon, Costco’s private label offerings, sold under its Kirkland brand and other third-party labels, include garments that closely resemble Lululemon’s well-known designs.
Lululemon alleges it has previously sent cease-and-desist letters to Costco concerning apparel it claims infringed its intellectual property. It asserts that some items were withdrawn but that similar garments continue to be sold under different names and labels.
Key Legal Claims in Lululemon vs Costco
The Lululemon vs Costco complaint sets out multiple causes of action under federal and state law. The main claims include trade dress infringement, trade mark infringement, design patent infringement and false designation of origin.
Trade Dress Infringement
Trade dress covers the overall visual appearance of a product that indicates its source to consumers, as long as that appearance is distinctive and non-functional. Lululemon claims that the look of its SCUBA hoodies, DEFINE jackets and ABC pants includes unique seams, panels and lines that together form protected trade dress.
The complaint states that Costco has sold similar garments, including Danskin hoodies, Jockey yoga jackets, Spyder yoga jackets and Kirkland pants, which allegedly copy these distinctive visual features and may confuse consumers about whether the items are genuine Lululemon products.
Trade Mark Infringement
The claim also covers Lululemon’s registered trade marks, including the word mark SCUBA and the TIDEWATER TEAL colour name used for certain garments. Lululemon argues that Costco’s use of these or similar marks on its products and marketing materials could mislead consumers and dilute the association between these marks and Lululemon’s brand.
Design Patent Infringement
In addition, Lululemon holds design patents covering the ornamental features of its SCUBA hoodies. A design patent protects how a product looks, rather than how it functions. The company claims that certain Costco garments copy the patented visual designs and therefore infringe its exclusive rights under US patent law.
False Designation of Origin and Unfair Competition
Finally, the suit includes claims for false designation of origin and unfair competition under the federal Lanham Act and California business law. Lululemon alleges that Costco’s sales of these garments misrepresent the source of the products and improperly benefit from the goodwill attached to Lululemon’s brand.
Possible Costco Arguments and Defences
At the time of writing, Costco had not filed a formal response. However, in similar disputes, a retailer may argue that any similarities relate to features that are common, functional or generic. Under US law, trade dress protection applies only to non-functional design elements. If Costco can show that the features Lululemon claims as trade dress are necessary for the garments’ function or common to many activewear products, the claims may fail.
Costco may also argue that the overall look of its products is sufficiently different so that an ordinary consumer is unlikely to be confused. For the trade mark claims, it could assert that words such as “scuba” or descriptive colour names are generic or purely descriptive, not source indicators.
In relation to design patents, Costco may argue that the accused garments do not appear substantially the same as Lululemon’s patented designs when judged by an ordinary observer familiar with similar products.
What Each Side Must Prove
Lululemon must establish that its trade dress is distinctive, non-functional and has acquired recognition in the minds of consumers as indicating the brand’s products. It must also show a likelihood of confusion, meaning that an appreciable number of ordinary buyers would believe Costco’s garments come from or are connected with Lululemon.
For the trade mark claims, the core test is also likelihood of confusion. Courts consider various factors, including the strength of the mark, similarity of the marks and products, evidence of actual confusion, and the defendant’s intent.
For the design patent claim, Lululemon must show that the overall appearance of Costco’s products is substantially the same as the patented design. Costco can challenge this by showing differences that are obvious to the ordinary observer or by pointing to similar prior designs that limit the scope of protection.
Wider Context and Industry Trends
The Lululemon vs Costco dispute sits within a broader trend of luxury and premium brands policing so-called dupe culture. Social media influencers often highlight budget alternatives to higher-end clothing, creating demand for similar-looking garments. While these cheaper versions appeal to price-conscious shoppers, they pose brand dilution risks for companies that rely on distinct design, brand goodwill and perceived exclusivity.
Several fashion and sportswear brands have launched enforcement actions in recent years, targeting both direct counterfeit goods and indirect knockoffs. Such cases often hinge on whether design elements are truly source-identifying or merely functional or generic. Courts have sometimes sided with brands, but proving trade dress infringement for apparel can be difficult when the design features serve practical purposes like fit or comfort.
Costco, for its part, is one of many large retailers that market private-label goods resembling popular branded products. This model can generate significant revenue but can also attract intellectual property disputes, particularly when original brands see widespread online discussion of lookalikes.
What May Happen Next
The next steps in Lululemon vs Costco will include Costco filing an answer or a motion to dismiss. If the suit continues, the parties will enter discovery, exchanging documents about product design, manufacturing, marketing and consumer perceptions. Expert evidence may also be presented to address whether the claimed designs are distinctive and non-functional.
Lululemon is seeking an injunction to halt further sales of the disputed garments, an order to recover profits, monetary damages for harm to its brand, and legal costs. If the case does not settle or resolve at an early stage, it may proceed to trial to decide whether Lululemon’s rights are valid and whether Costco’s garments infringe them.
The outcome will depend on whether Lululemon can prove that the specific design elements are protectable and that Costco’s garments are likely to mislead consumers. The case will be closely watched by fashion brands, retailers and IP lawyers for its implications for design-based branding and the line between permissible inspiration and infringement.
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