Peloton and Lululemon Litigation​

By Patricia K​

What do you need to know this week?

What happens when a former partner becomes a competitor? The current litigation between Lululemon (a Canadian athletic apparel company) and Peloton suggests a not-so-happy ending.

For five years, the companies worked together to create co-branded workout apparel. However, after Peloton asked to end their agreement earlier this year to start its own sportswear line, relationships between the two companies quickly soured.

Last month, Lululemon issued a cease and desist letter against Peloton asking the exercise bike maker to stop copying its patented sports bra and legging styles. It’s alleged that Peloton asked for more time to respond to the demands. However, after allowing the extension, Lululemon was instead greeted by Peloton’s pre-emptive lawsuit in a New York federal court asking for a declaration that Lululemon’s claim had no merit.

This led Lululemon to sue Peloton for patent infringement in a California federal court last Monday. In particular, Lululemon accused the exercise bike company of ‘imitating [its] innovative designs’ and infringing six of its patents.

Why is this important for your interviews?

The ongoing litigation showcases the rising competition in the home fitness space. In particular, it shows how quickly previous partners can turn into competitors as they expand into similar markets.

This clash occurred after Lululemon’s recent acquisition of Mirror, a company that also provides pre-recorded home workouts, and Peloton’s expansion into the athletic apparel industry. Therefore, the litigation highlights a current ‘turf war’ as each company attempts to maintain dominance in this increasingly competitive space.

Why resort to litigation? The use of intellectual property (IP) rights help companies protect their market share and act as a powerful barrier to entry for new entrants. In particular, patents are registered IP rights that prevent another company from copying a product. This effectively gives companies a monopoly over specific products and the right to sue competitors who infringe any of their patents. Peloton is a great example of this; it recently filed patent lawsuits against two of its other rivals – iFit and Echelon – to preserve its market-leading position.

How is this topic relevant to law firms?

This particular litigation will require the expertise of patent infringement lawyers and a law firm’s disputes and IP departments. Here, Latham & Watkins is representing Peloton in its proceedings (unsurprising given its reputation as Peloton’s go-to litigation firm). Knobbe Martens, a specialist IP law firm, represents Lululemon.