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Ross Stores denies Lululemon's allegations over 'lowest-quality' counterfeit leggings

Ross Dress for Less sign in Thousand Oaks, CA. (Getty)

Ross Stores Inc. (ROST) and a California-based apparel supplier accused in a lawsuit of selling “the lowest-quality” counterfeit Lululemon Athletica Inc. leggings have denied the allegations in newly filed responses.

The Vancouver-based apparel company (LULU) filed a lawsuit in June alleging claims of trademark infringement, counterfeiting and unfair competition against Ross Stores and Impulse Off Price Apparel (IOPA).

In separate responses filed on Aug. 15, both Ross and IOPA denied the allegations, repeatedly saying that the apparel companies were “without sufficient knowledge or information to form a belief as to the truth of the allegations... and on that basis, (deny) each and every allegation.”

In addition to the statements of denial, both companies filed several defences in response to the Lululemon lawsuit.

Among the ten defences brought forward in the responses, the companies said that each of Lululemon’s claims seeking relief is banned under the “first sale doctrine,” a U.S. Department of Justice statute that allows a person who knowingly purchases a copy of a copyrighted work from the copyright holder the right to sell it, regardless of what the copyright owner wants.

The companies also said that Lululemon’s claims for relief should be barred “because (the) plaintiff has sustained no loss or damages for which a reasonable opportunity for investigation or discovery is likely to provide evidentiary support.”

‘Lowest-quality counterfeit leggings’

At the heart of Lululemon’s lawsuit is an allegation that counterfeit leggings were being sold at a Ross Stores chain at a steep discount.

According to Lululemon’s original 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.

Lululemon representatives had purchased 20 pairs of counterfeit leggings in March from two California locations of Dd’s Discounts, a chain owned by Ross Stores, the complaint said. 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 US$7.99 – US$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)

“Lululemon analyzed the counterfeit products and determined they were among the lowest-quality counterfeit leggings that Lululemon had ever encountered,” the lawsuit said.

The apparel company alleged in the complaint that “these counterfeit sales have resulted in consumer confusion and significantly harmed Lululemon and the consumer goodwill associated with the Lululemon brand. The company 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 and IOPA both called for a judgement dismissing the complaint and said that Lululemon should be awarded nothing “whether in the form of damages or injunctive relief.” Both companies also demanded a jury trial.

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