Lululemon's Legal Win Against Costco Shows the Power of Trade Dress Protection

Lululemon Athletica filed a federal lawsuit against Costco in June 2025, accusing the retail giant of selling knockoff versions of its bestselling products under the Kirkland Signature brand. The complaint, filed in the U.S. District Court for the Central District of California, alleged trademark infringement, trade dress violations, and design patent infringement. As of mid-2026, the two companies have reached settlement agreements on nearly every item in dispute, with only one jacket remaining unresolved. The case offers an important lesson for any business owner who relies on a distinctive product appearance to compete in the marketplace.

The Rise of "Dupe Culture" and Its Legal Limits

The lawsuit arrived against the backdrop of a growing consumer trend known as "dupe culture," where shoppers openly seek out and celebrate affordable imitations of premium products. Social media platforms have fueled this trend, with consumers posting side-by-side comparisons of name-brand items and their budget alternatives. Retailers have been eager to capitalize on the demand, but Lululemon's case against Costco demonstrates that there are legal boundaries.

According to the complaint, Costco's Kirkland-brand products mimicked specific Lululemon designs so closely that consumers could mistake them for the originals. One product even included the word "Scuba" in its name, a term trademarked by Lululemon for its popular half-zip hoodies. Other allegations pointed to the use of Lululemon's proprietary color name "Tidewater Teal" and ornamental stitching patterns that closely followed Lululemon's distinctive design elements.

What Is Trade Dress and Why Does It Matter?

Trade dress refers to the overall visual appearance of a product or its packaging that signals the product's source to consumers. Unlike a traditional trademark, which protects a name or logo, trade dress protects elements like shape, color, texture, and design features that together create a distinctive look. To prevail on a trade dress claim, a company must show that its product's appearance is distinctive, either inherently or through consumer recognition, and that a competitor's product is similar enough to cause confusion.

In the Lululemon case, the company argued that Costco's imitations were so visually similar that the public would be confused about whether the products were genuine, even after the point of sale. This "post-sale confusion" theory is significant because it extends trademark protection beyond the moment a consumer makes a purchase decision. The argument is that when others see someone wearing a Costco knockoff, they might believe it is a Lululemon product, which dilutes the brand's value and reputation over time.

Key Takeaway for Business Owners

This case is a reminder that your brand extends beyond your name and logo. If your products have a distinctive appearance that sets them apart from competitors, that visual identity may qualify for trade dress protection. Business owners should consider whether their product designs, packaging, or color schemes have become associated with their brand in the minds of consumers. If so, those elements could be protectable assets worth defending. Documenting your design choices, building consumer recognition through consistent marketing, and monitoring the marketplace for imitations are all practical steps that can strengthen your position if a dispute arises.

The Lululemon case also shows that even large, well-resourced competitors can be held accountable when they cross the line from inspiration to imitation. The quick path to settlement suggests that Costco recognized the strength of Lululemon's claims, which should encourage smaller brand owners who may feel outmatched to take their trade dress rights seriously.

Want to learn more about protecting your brand's trade dress? Schedule a free consultation with Diorio IP Law Group to discuss your options.