Dive Brief:
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Lululemon filed a lawsuit on Friday against Under Armour, claiming “Under Armour has used and continues to use the claimed designs of Patents-inSuit, without Lululemon’s permission, on the Armour Eclipse Low Impact, Armour Shape Low Impact, UA On the Move, and UA Printed Strappy Bra sports bras … that Under Armour makes, uses, offers for sale, sells, and/or imports into the United States,” according to court documents filed in U.S. District Court for the District of Delaware.
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Lululemon is seeking injunctive relief to stop Under Armour from further infringing on the Patents-in-Suit and Trade Dress; damages and/or disgorgement of Under Armour’s profits from its infringing activities; prejudgment interest; and costs and attorneys’ fees, according to the filing. “[A]n ordinary observer will perceive the overall appearance of the designs of the infringing products to be substantially the same as the overall appearance of the designs of the patent-in-suit,” the filing reads.
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"Under Armour as a leading Brand in the sports performance market takes the intellectual property rights of others very seriously," an Under Armour spokesperson told Retail Dive. Lululemon declined to comment to Retail Dive.
Dive Insight:
Lululemon has ample reason to safeguard its sports bra designs, considering how important the category is to its bottom line. Its latest sports bra (not detailed in the suit) carries a $100 price tag, a hefty number that so far hasn't impeded sales, executives told analysts last month. “We’re really excited. It’s our most expensive bra in our portfolio,” Lululemon Vice President, Global Merchandising Sun Choe told analysts, according to a transcript from Seeking Alpha. “We have seen zero price resistance. But what we’re finding is that if we have a technical solve and we’re differentiated in the market, she’s willing to pay the price.”
When it comes to yoga wear and athleisure, (a trendy space arguably invented by Lululemon), competition is stiff and the market is maturing. But GlobalData Retail Managing Director Neil Saunders said Lululemon is “holding its own,” in part thanks to the proprietary innovations that this lawsuit seeks to protect. In its previous quarter Lululemon faltered on a bland spring merchandise selection but in its first quarter recovered nicely, with more colorful garments and that best-selling bra.
"[T]he Infringing products are so similar in design to the trade dress that they are likely to cause confusion, mistake, and deception as to the source or origin of the infringing goods among consumers," the lawsuit reads.
The company last month reported that first quarter net revenue rose 5% to $520.3 million from $495.52 million in the year-ago period, beating the FactSet analyst projections cited by MarketWatch for $514 million. Total same-store sales fell 1% and direct-to-consumer sales, including e-commerce, was flat.
"A strong menswear offering with some high-quality key pieces, continued innovation in women's collections, and effective marketing, are all helping Lululemon maintain momentum," Saunders wrote in a note last month emailed to Retail Dive. "Positively, we believe that all of these initiatives are capable of driving further growth in the year ahead."
