Why is Lululemon suing Costco is a question shoppers everywhere started asking in June 2025 when the athletic wear giant filed a 49 page lawsuit against the wholesale club. The short answer is Lululemon claims Costco sells knockoffs of its popular clothing and tricks customers into thinking they are buying the real thing.
Lululemon filed the lawsuit on June 27, 2025 in the U.S. District Court for the Central District of California. The company says Costco sells products that look so much like Lululemon gear that buyers get confused about what they are actually buying.
What products does Lululemon say Costco copied?
The lawsuit names several Costco products that Lululemon claims copy its designs.
- Lululemon Scuba Hoodie sells for around $185 AUD, while Costco’s Danskin Half Zip Pullover sells for about $13 AUD
- Lululemon Define Jacket costs around $200 AUD, while Costco’s Jockey Ladies Yoga Jacket and Spyder Women’s Yoga Jacket sell for about $35 AUD
- Lululemon ABC Pants cost around $200 AUD, while Costco’s Kirkland 5 Pocket Performance Pant sells for about $16 AUD
- Hi Tec Men’s Scuba Full Zip at Costco sells for around $32 AUD compared to Lululemon jackets over $160 AUD
The price gap between the two brands is massive. Costco versions cost a fraction of what Lululemon charges.
What exactly is Lululemon accusing Costco of doing?
Lululemon makes four main claims in the lawsuit.
Trade dress infringement means copying the overall look and feel of a product so closely that customers cannot tell the difference. Trade dress protects things like shape, color, design and visual appearance. Lululemon says Costco products look so similar to its own that an “ordinary observer” would struggle to tell them apart.
Patent infringement involves copying protected designs. Lululemon owns design patents for features on its Scuba hoodie like the unique kangaroo pocket shape, curved seams and textured panel layout.
Trademark infringement covers using protected brand names and terms. Lululemon claims Costco used terms like “Scuba” and even specific color names like “Tidewater Teal” to market similar products.
Unfair competition under California law means Costco profited from confusion and let customers believe products were made by Lululemon when they were not.
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What does Lululemon want from the lawsuit?
Lululemon wants three things from the court.
- Money for lost profits and damages
- A court order forcing Costco to stop selling the products Lululemon says copy its designs
- A jury trial
Lululemon has not said exactly how much money it wants. The company only says it suffered “significant harm” to its brands and reputation.
Why does Lululemon care about this so much?
Lululemon made over $16.5 billion AUD in revenue last year. The company invests heavily in designing and testing its products. A Lululemon spokesperson said “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.”
The company built its reputation on performance athletic wear with specific fits and construction techniques. Letting cheaper copies flood the market could hurt both sales and brand image.
What is trade dress and why does it matter here?
Trade dress protects the visual appearance of a product that tells customers where it came from. Think of it like this. When you see a certain style of hoodie with a specific pocket shape and seam pattern, you might instantly think “that looks like Lululemon” even without seeing a logo.
For Lululemon to win on trade dress, it needs to prove three things.
- Its product designs are distinctive and customers associate them with Lululemon
- The design features are not functional, meaning they exist for style and branding purposes and not because the product needs them to work
- Costco products are similar enough to cause confusion among buyers
Courts look at factors like how similar the designs are, whether products compete in the same market, and whether there is evidence customers actually got confused.
Has Lululemon sued other companies before?
Yes. Lululemon sued Peloton in 2021 over similar looking sports bras and leggings. That case settled in 2023 and the two companies formed a five year partnership, with Lululemon becoming Peloton’s official athletic apparel partner.
This shows Lululemon takes design protection seriously but is also open to deals when companies work things out.
What is the “dupe” economy and how does it connect to this lawsuit?
Dupes are affordable products that closely resemble expensive brand name items. Social media, especially TikTok, has turned finding dupes into a trend. People post videos with hashtags like #LululemonDupe and #LuluDupe showing off cheaper alternatives.
A January 2025 Washington Post headline asked “Is that hoodie Lululemon or a Costco dupe? No one has to know but you.”
Lululemon points to this media coverage in its lawsuit. The company argues one purpose of selling dupes is to confuse consumers into thinking they bought the real thing.
What makes Costco’s Kirkland brand so successful?
Kirkland Signature, Costco’s private label, generated around $135 billion AUD in sales last year. That is nearly one third of all Costco revenue and bigger than Nike, Coca Cola and United Airlines combined.
Costco built Kirkland by offering products that match name brand quality at lower prices. The company often uses the same manufacturers that make premium products. Starbucks makes some Kirkland coffee. Duracell, Kimberly Clark and Ocean Spray also reportedly produce Kirkland items.
This business model creates a problem for premium brands. Customers learn to trust Kirkland quality and may start questioning whether name brands are worth the extra cost.
How might this lawsuit affect shoppers?
If Lululemon wins, Costco would need to pull the products named in the lawsuit from shelves. Shoppers looking for affordable alternatives would lose access to those items.
If Costco wins, it signals that similar looking products with different branding are okay to sell. Other retailers might feel more confident offering their own versions of popular athletic wear.
Either way, this lawsuit highlights the tension between brands protecting their designs and shoppers wanting affordable options.
Has Costco faced lawsuits like this before?
Yes. Tiffany and Co sued Costco for selling engagement rings labeled as “Tiffany” settings. The case went back and forth through courts. Ultimately, the Second Circuit Court of Appeals ruled consumers would not have been confused by the rings Costco sold.
The Tiffany case shows Costco can win these fights, but each case depends on its specific facts about consumer confusion and intent to deceive.
What happens next in the Lululemon Costco lawsuit?
Costco has not publicly commented on the lawsuit. The case will move through the court system, which can take months or years. Both sides may try to settle out of court like Lululemon did with Peloton.
Key things to watch include whether the court grants any early orders to stop Costco from selling the products, whether the case goes to trial, and whether the companies reach a settlement.
FAQ
When did Lululemon file the lawsuit against Costco? Lululemon filed the lawsuit on June 27, 2025 in California federal court.
What products are involved in the lawsuit? Scuba hoodies and sweatshirts, Define jackets, and ABC pants. Specific Costco products named include Danskin Half Zip Pullover, Jockey Ladies Yoga Jacket, Spyder Women’s Yoga Jacket, Hi Tec Men’s Scuba Full Zip, and Kirkland 5 Pocket Performance Pant.
How much cheaper are Costco versions compared to Lululemon? Costco versions sell for roughly 90 percent less. A Lululemon Scuba Hoodie costs around $185 AUD while Costco’s similar pullover costs about $13 AUD.
What is trade dress infringement? Trade dress protects the overall visual appearance of a product. Infringement happens when one product looks so much like another that customers get confused about who made it.
Has Lululemon sued other companies over design copying? Yes. Lululemon sued Peloton in 2021 over similar apparel. That case settled in 2023 and the companies became partners.
What does Lululemon want from the lawsuit? Money damages for lost profits, a court order forcing Costco to stop selling the products, and a jury trial.
How big is Lululemon as a company? Lululemon made over $16.5 billion AUD in revenue in 2024 and operates more than 750 stores worldwide.
How big is Costco’s Kirkland brand? Kirkland Signature generated around $135 billion AUD in sales last year, making it bigger than Nike, Coca Cola and Starbucks combined.
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