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Lululemon files lawsuit against Ross Stores over 'lowest-quality' knock-off leggings

Washington DC: Lululemon building exterior with woman entering store by sign.

Lululemon Athletica Inc. (LULU) has filed a lawsuit against Ross Stores Inc. (ROST) and one of its suppliers for allegedly selling “the lowest-quality” counterfeit versions of the company’s leggings.

The Vancouver-based apparel company filed the lawsuit in the U.S. Northern District of California last month, alleging claims of trademark infringement, counterfeiting, and unfair competition against Ross Stores and Impulse Off Price Apparel (IOPA), a California apparel supplier.

According to the complaint, Ross Stores and IOPA “distributed and sold at least thousands of counterfeit Lululemon products to consumers and retailers” that Lululemon claims were “of a quality substantially and materially inferior” to its genuine products.

“These counterfeit sales have resulted in consumer confusion and significantly harmed Lululemon and the consumer goodwill associated with the Lululemon brand,” the lawsuit said.

‘Among the lowest-quality’ leggings

Lululemon representatives purchased 20 pairs of counterfeit leggings in March from two California locations of Dd’s Discounts, a chain owned by Ross Stores, the complaint says. Lululemon attached photos of the alleged counterfeit designs, which included tags that mimic the company’s authentic versions and state that the product was designed in Vancouver. Dd’s Discounts was allegedly selling the leggings for $7.99 – $120.01 less than the retail price of the authentic versions.

Lululemon alleges that counterfeit versions of its leggings, featuring replica tags that say the products were made in Vancouver, were being sold by Ross Stores.

“Lululemon analyzed the counterfeit products and determined they were among the lowest-quality counterfeit leggings that Lululemon had ever encountered,” the lawsuit said. According to the complaint, Lululemon’s authentic leggings are typically made of “smooth, four-way stretch... quick-drying, sweat-wicking fabric.” The counterfeit products, on the other hand, “were made of thin, cheap polyester blends and were not constructed with the high-quality details found in genuine Lululemon products.”

Lululemon sells its products exclusively through its bricks-and-mortar stores and e-commerce website, as well as through partnerships with premium yoga studios, gyms and wellness centres. The company alleged that given “it is well known” that Lululemon does not sell its products through discount retailers, Ross Stores and IOPA were either aware or wilfully blind to the authenticity of the products being sold.

In the lawsuit, Lululemon also included social media posts that it said showed consumers have been confused by the counterfeit products.

“The harm to Lululemon’s brand and goodwill caused by (the) defendants’ conduct is ongoing, as the negative reviews continue to mount, and confirm the confusion and disappointment caused to consumers due to the inferior quality of the counterfeit “Lululemon” branded goods sold by (the) defendants,” the lawsuit alleges.

Lululemon is seeking the destruction of any and all products that infringe the company’s trademarks, as well as damages and profits attributable to the alleged sales.

Ross Stores and IOPA filed a motion requesting an extension of time to file a response, which was initially due on July 15 and 16. The order was granted and the defendants must file a response on or before August 15.

Ross Stores has not responded to a request for comment as of Monday.

This is not the first time Lululemon has gone to court over trademark infringement and concerns about counterfeit products.

In a complaint filed with the United States District Court in Illinois in February, Lululemon alleged that a list of defendants are selling counterfeit knockoffs online, which has caused the company to be “irreparably damaged through consumer confusion, dilution and tarnishment of its valuable trademarks.” Lululemon alleged the individuals and businesses selling counterfeit products resided in China “or other foreign jurisdictions.”

In April, Lululemon won a default judgement as the defendants failed to respond to Lululemon’s complaint. Judge Gary Feinerman ordered the defendants to stop using Lululemon trademarks and have the website domains either be transferred to Lululemon’s control or shutdown. He also ordered the defendants to pay Lululemon $200,000 in statutory damages.

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