Lovers of figure-hugging yoga wear are a highly-prized market these days. And now, Lululemon Athletica Inc. wants to stand between them and their Calvins.
Lululemon’s skyrocketing popularity has been built on stylish athletic apparel – especially its bum-accenting yoga pants. Its success has fuelled competition, however, and this week the Vancouver-based retailer filed suit against rival Calvin Klein Inc., launching a war over a waistband.
Lululemon’s case accuses Calvin Klein and the manufacturer of its “Performance” brand of athletic pants, G-III Apparel Group Ltd., of selling pants that are remarkably similar to the Canadian retailer’s clingy designs and stylized waistbands. The allegations have not been proven.
The claim adds Lululemon to the growing list of companies who are engaging in more aggressive legal battles over patents. Documents filed in a Delaware court on Monday claim that Calvin Klein and G-III’s pants have “irreparably injured Lululemon.” The filing singles out Calvin Klein’s knee-length running tights and “compression overlapping waistband pants,” claiming they infringe on a number of patents for Lululemon’s pants designs, which were filed in the U.S. this year and last. Those include the patent for Lululemon’s Astro Pant products.
One of the main design elements that seems to be at issue is the look of the waistband on the Calvin Klein pants, which appears similar to the crossover fabric that is a popular feature of the Lululemon designs.
“The design is incredibly important [to Lululemon’s popularity]. It’s a fit issue, and if you’ve got that tuck-in, overlap feature that makes bodies look good, that’s obviously very important,” said Wendy Evans, a retail consultant and founder of Toronto-based Evans & Co. Consultants Inc.
“Retailers have looked longingly at Lululemon’s results, and increasing sales, and great profitability. And there is a huge increase in pilates and yoga; it’s definitely a growth category, and they’re the stars in it.
“So, very tempting to try and replicate in as close a way as possible.”
But it is becoming riskier, legally, for competitors to imitate another company’s products too closely.
Patent litigation has been on the rise in the U.S. since 1991, according to a study by PricewaterhouseCoopers. Much of this growth is driven by industries such as computer hardware and software, biotechnology and pharma, and consumer products. (For the most part, it is not driven by pants: The clothing and textiles industry accounted for just 12 patent cases between 2006 and 2010.)
“The value of patents is becoming more recognized,” said Chris Barry, a partner at PwC and one of the authors of the study. Companies are beginning to accumulate patents as a defensive measure – the idea being that litigious competitors will think twice about filing a patent claim if the defendant has ammunition for a countersuit.
A year ago, a consortium of tech companies including Apple Inc. and Microsoft Corp. readily forked over $4.5-billion (U.S.) for more than 6,000 patents from defunct Nortel Networks Corp. Then Google paid $12.5-billion for Motorola Mobility – and more importantly, for its 17,000 patents.
“Companies are trying to accumulate war chests of patents to protect them,” Mr. Barry said. “It’s a bit like an arms war.”
Apple and Samsung Technologies are embroiled in a patent war over their tablet and smartphone devices. Until this month, a patent battle had added to the woes of struggling Canadian smartphone maker Research in Motion Ltd. The company was initially ordered to pay $147.2-million to New Jersey-based Mformation Technologies Ltd., but the decision was overturned in a California court last week.
Far from Silicon Valley, Lululemon has taken to Delaware for its fight against Calvin Klein.
According to PwC’s research, Delaware is one of the federal district courts (along with Texas Eastern and Virginia Eastern) that tend to have higher success rates for patent holders and award larger amounts in damages. The median damages awarded in successful cases by the Delaware District Court from 1995 to 2010 was $18.16-million (U.S.), second only to Virginia Eastern, where median damages awarded were $30.82-million.
Lululemon has been expanding into the U.S., where it now has 108 stores. The company is seeking an injunction preventing Calvin Klein from selling its “Performance” pants, as well as damages.
Standing outside of the brand’s store on Queen St. in downtown Toronto, shopper Maayan Fix praised the pants she was wearing, which she also donned when she climbed Mount Kenya.
“It’s such good quality (and) it just makes you look better,” she said. While Ms. Fix said she would never consider a copycat brand, others may be lured to athletic apparel lines with a similar look.
Lawyers for the Canadian retailer contacted Calvin Klein in early July to make the company aware of the patent infringement, but claimed in court documents that the reply it received late last month was not satisfactory.
“They’ve chosen a high-profile competitor to bring this to a head ... because that will in all likelihood influence the plans of other companies,” Ms. Evans said. “You’re sharpening your knives.”
Lululemon declined to comment on the case. Requests for comment from G-III, Calvin Klein and parent company PVH Corp. were not returned.