Lululemon Athletica (TSX:LLL) has filed a lawsuit in the U.S. alleging PVH Corp.'s Calvin Klein and G-III Apparel Group Ltd., a manufacturer and supplier for the brand, infringed on three patents covering an overlapping style of waistband.
The Vancouver-based retailer filed design patents for the Astro line of pants as early as September 2011, but filed patents on its crop pants much more recently, in June.
Lululemon said in the documents filed Monday that Calvin Klein — one of the most famous designers in the world — sells pants under its "Performance" brand that include the same waistband design elements and pant style, which is covered by its patents.
Much of Lululemon's success can be attributed to carefully managing its image, made up of both its yoga-inspired philosophy and its functional, flattering and comfortable workout wear that has proven popular with Oprah and other celebrities. Its logo is now ubiquitous in yoga studios and gyms.
"Lululemon's strong ties to its communities, quality products and proprietary designs set it apart from other retailers," it said in filings to the U.S. District Court in Delaware.
The waistband in question, featured on Lululemon's Astro line of pants, consists of a series of angular pieces of fabric that form a v-shaped waistline that can be rolled down to sit lower on the waist. They're made of the company's trademarked Luon fabric.
Calvin Klein's pants have a similar v-shaped waistline, but retail at a fraction of the price.
Lululemon's Astro crop pants are $78 on its website, while the Calvin Klein knee length running tights are $39 on Amazon.com. The longer version of the Astro and Performance tights retail for $98 and $60 respectively.
"The 'wrap' design of the waistband moulds to your shape and doesn't cut into the belly," Lululemon says of its Astro pants on the company's blog.
Lululemon is seeking an injunction to prevent its competitors from selling the pants. It is also seeking damages including lost profits, a "reasonable royalty award," disgorgement of Calvin Klein's profits and costs related to the litigation.
The allegations have not been proven in court.
Design patents are common among retailers, especially those with unique brand images like Lululemon or Apple, patent lawyer Elias Borges says.
Design patents are different than utility patent because rather than function, they cover specific styles of items that have already been invented, like chairs or pants.
To be successful in a patent infringement suit, patentholders must prove their idea was novel and unique, as well as that they had the idea before anyone else, he said.
A judgment as to whether a patent infringement takes place can be subjective, however, as design patents don't cover specifics like dimensions, sizes or colour.
Companies also have a limited amount of time —12 months after their product hits the shelf — to file a patent.
Borges added that the timing of Lululemon's filing — the last of which was in June — could be questionable because Calvin Klein may be able to make a case that it already marketed its line before Lululemon's patent was acknowledged.
Lululemon said it first contacted Calvin Klein in July, but the issue has not been resolved. It declined further comment on the case because it is before the courts.
Calvin Klein was not immediately available for comment.
Already household name in Canada, Lululemon has been growing in popularity in the United States and Australia, where the company continues to open new stores.
While other specialty clothing retailers have struggled in the tough economy, Lululemon has consistently boosted quarterly profits and revenues as its reputation grows.
Last year, the company began an initiative to boost its inventories to meet the growing demand of shoppers and appease those who were confident the company could grow faster.
Lululemon opened its first store in Vancouver in 1998 and now has 47 stores in Canada, 108 in the United States, 18 in Australia and one store in New Zealand.
Shares in the company were up 3.3 per cent or $1.89 to close at $58.86 Wednesday on the Toronto Stock Exchange.Suggest a correction