Nike Takes on Lululemon
Lululemon’s in-house counsel have not had a restful holiday time. Prior to the holidays, Peloton took a legal swing at Lululemon regarding its intellectual property rights to its clothing designs. Now Nike has lawyered up and is going after Lululemon as it relates to Lululemon’s foray into the fitness technology sphere. Ever keen to follow fashion law cases that impact Canadian companies, here’s a summary of the case.
In July 2020, Lululemon purchased Mirror, which is an at-home company that provides live and on demand classes through a streaming device that doubles as a mirror. Lululemon purchased Mirror for approximately $500 million. This is significant as it moves Lululemon into the fitness technology space, an obvious compliment to its well-entrenched position in the fitness apparel space.
Nike issued a claim against Lululemon and Curiouser Products on January 5, 2022. In its claim, Nike states that it began creating digital sports innovations since 1983, when it filed a patent application for a device that tracked a runner’s speed, the dis andtance traversed, elapsed time and calories expended. The device included a transmitter, sensor, receiver and gathered data. Nike claims that it since leveraged its invention to partner in 2006 with Apple in a Nike+ iPod tracking system, as an example. Nike has since licensed its patent to other third party companies to create other collaborations in the fitness technology industry, as well as creating its own mobile apps. Nike claims that, as of the date of the claim, Nike’s “digital ecosystem has more than 75 million people actively engaged in its digital ecosystem of products”. Nike has accumulated a “robust portfolio of patents directed to its digital sports innovations for use in or with fitness equipment and apps”.
Nike claims that Lululemon’s manufacture and sale of Mirror Home Gyms and accompanying mobile applications infringes Nike’s patents. Nike is seeking, amongst other things, a permanent injunction and damages.
As of the date of this article, Lululemon has not filed an official response with the court. However, it did issue a statement stating that “[Nike’s] patents in question are overly broad and invalid. We are confident in our position and look forward to defending in court.”. Of course, Nike’s claims are allegations at this point and we look forward to Lululemon’s defence and to see if it will counterclaim the original owner of the Mirror.
What is the takeaway?
At this point, what we can glean from this matter as a takeaway is the importance of proactively and strategically protecting your company’s intellectual property, amassing an intellectual property portfolio, negotiating lock tight written agreements with third parties and enforcing your intellectual property rights. In addition, if you are purchasing a company or assets from a third party, it is important to conduct appropriate due diligence over the intellectual property to determine if they infringe any third party rights. Accompanying this will including robust representations and warranties and indemnification provisions.