The athletic-wear giant in Lululemon (LULU, Financial) filed suit in California last week, accusing Costco (COST, Financial) of knocking off its $128 Hi-Tec Men's Scuba Full Zip and hawking a near-identical version for just $19.97. No wonder LULU shares popped almost 4% on the news.
In its complaint, Lululemon argues that Costco is trading on its hard-won reputation by peddling unlicensed gear that mimics the brand's patented design and premium materials—an 84% price cut on a style Roll, stitch and all.
By defaulting to its private-label brand, Costco avoids licensing fees and pockets the margin, Lululemon says, while serious legal action looms: full recovery of lost profits and an injunction to stop these sales in their tracks.
This isn't the first time Lululemon has flexed its IP muscles. Back in 2021 it sued Peloton over too-close-for-comfort workout apparel—and by 2023 they'd turned that spat into a five-year partnership. Could Costco end up on the same fast track to a friendly resolution, or is Lululemon ready to draw a hard line this time?
At stake here is more than one jacket—it's about defending design patents, preserving brand cachet and protecting healthy margins.
