Lululemon Sues Costco Over Alleged Trademark and Design Patent Infringement in Apparel Duplication Dispute

Lululemon Athletica recently filed a lawsuit against Costco Wholesale in the United States, accusing the retail giant of extensive intellectual property infringement involving trademarks, trade dress, and design patents. The complaint centers on Costco’s sale of lower-priced apparel items that allegedly imitate Lululemon’s distinctive SCUBA® hoodies, DEFINE® jackets, and ABC® pants, which Lululemon claims constitute unauthorized copies or “dupes” of its protected designs.

The lawsuit highlights the growing popularity of dupes in the fashion industry—affordable alternatives that replicate the look of high-end brands. While consumers may view these as budget-friendly options, Lululemon’s action serves as a reminder that such products can cross legal boundaries, infringing on trademark rights and design patents.

At the core of Lululemon’s claims are two U.S. design patents covering the ornamental design of its SCUBA® hoodies and sweatshirts. Design patents, distinct from utility patents, protect the visual appearance of a product rather than its functional aspects. Under U.S. law, utility patents safeguard how an item works (35 U.S.C. §101), whereas design patents protect ornamental features (35 U.S.C. §171).

In Canada, the comparable protection is provided by industrial designs governed by the Industrial Designs Act. Canadian industrial designs cover only ornamental aspects that appeal visually to consumers, excluding purely functional items without decorative value. Infringement is assessed primarily by visual impression, focusing on whether the alleged infringing design appears confusingly similar to the registered design.

Canadian courts apply a four-part analysis considering prior designs, functional elements, the scope of the registered design, and a side-by-side comparison from the perspective of an "informed consumer" familiar with the market. Notably, a defendant’s intent or registration of their own design does not shield them from liability; courts emphasize the substantive visual distinctiveness of the designs.

While Canada maintains a registration system for industrial designs, it involves fewer formalities and less substantive examination than the U.S. design patent system. For fashion brands like Lululemon, understanding and navigating both frameworks is essential to enforcing intellectual property rights across borders, especially when visual design is central to brand identity.

Beyond design patents, Lululemon alleges trade dress infringement, asserting that Costco copied the distinctive visual appearance of its apparel even without using brand names. The lawsuit specifically identifies three product lines:

- DEFINE® Jacket Trade Dress: Characterized by ornamental, non-functional curvilinear seam lines on the front and back.

- SCUBA® Hoodie Trade Dress: Recognizable through unique pocket designs and seam patterns extending from the neckline.

- ABC® Pant Trade Dress: Featuring intricate ornamental lines around the crotch, waistband, and legs forming a distinctive silhouette.

Trade dress protection plays a significant role in safeguarding the visual identity of products in both the U.S. and Canada, though the legal approaches differ. In the U.S., trade dress is explicitly protected under the Lanham Act, covering both product packaging and configuration as source identifiers akin to trademarks. Protection can be registered or established through acquired distinctiveness and non-functionality under 15 U.S.C. §1125(a).

Canada lacks a statutory definition of trade dress; instead, protection has evolved through case law under the broader category of distinctive non-traditional trademarks. Canadian trade dress rights may extend to features such as shape, packaging, color, and even store layout, provided the applicant demonstrates sufficient consumer recognition and distinctiveness.

This divergence in legal frameworks is particularly relevant to Lululemon’s claims against Costco. In the U.S., Lululemon asserts trade dress rights over product appearance elements like stitching, seam placement, and pocket shapes based on their distinctiveness and source-identifying function. In Canada, similar elements may be protected under common law or registered trademark rights if the brand can prove consumer association with those design features.

Additionally, Lululemon alleges trademark infringement concerning its registered SCUBA® mark for hooded sweatshirts, jackets, and tops. The complaint claims Costco used the term or confusingly similar marks on products such as the Hi-Tec Men's Scuba Full Zip, potentially misleading consumers about an affiliation with Lululemon.

This lawsuit exemplifies the challenges fashion brands face in protecting their intellectual property amid the rise of dupes and highlights the nuanced differences between U.S. and Canadian IP law in design and trade dress enforcement.