A New York federal judge has sided with Lululemon and tossed out a lawsuit waged against it by Peloton over the parties’ lookalike sports bras and yoga pants. In an opinion and order on Thursday, Judge Andrew Carter of the U.S. District Court for the Southern District of New York (“SDNY”) granted Lululemon’s motion to dismiss Peloton’s lawsuit, finding that the declaratory judgment action that Peloton lodged against it last year – prompted by a cease-and-desist letter that it received from Lululemon – amounts to an anticipatory action. The suit is part of a pair of rival cases between the two parties, which pulled the plug on a 5-year-long co-branding partnership last year.
The clash got its start on November 24, 2021 when Peloton filed a declaratory judgment action against Lululemon with the SDNY, alleging that it received a cease-and-desist letter from Lulu (in which Lulu alleged that five of Peloton’s private label sports bras infringe its design patents, and a pair of Peloton-branded leggings infringe its trade dress rights). In furtherance of its DJ suit, Peloton sought a declaration from the court that, among other things, it did not infringe Lulu’s patents or trade dress. Escalating the matter, Lululemon lodged a complaint of its own on November 29 – albeit with the Central District of California – arguing that Peloton is on the hook for design patent and trade dress infringement in connection with its sale of “copycat” athleticwear.
Nov. 11, 2021 – Lululemon sends cease-and-desist letter to Peloton
Nov. 24, 2021 – Peloton sues Lululemon (declaratory judgment)
Nov. 29, 2021 – Lululemon sues Peloton (design patent & trademark infringement)
Lululemon pushed for dismissal early this year, claiming that that Peloton filed “an improper anticipatory declaratory judgment action” – after Lulu says it approached Peloton in response to the letter in order to resolve the matter out of court – in order to “game” the venue in the design patent and trade dress infringement case.
In his order on Thursday, Judge Carter determined that Peloton’s DJ suit “is an anticipatory action that warrants dismissal.” Here, “both parties agree” that in the wake of receiving Lulu’s cease-and-desist letter, Peloton informed Lulu on November 15 that it could not guarantee that its response would be ready by the November 19 deadline. Lulu responded that “[a]s a matter of professional courtesy, we are happy to consider extending the deadline for response,” once Peloton proposes a new deadline. “Peloton answered by proposing a deadline of November 24, and lululemon agreed,” according to the court, with Lulu stating that “[p]er your request, lululemon agrees to extend the deadline for Peloton’s response to November 24.”
Instead of sending a response to the cease-and-desist on November 24, Peloton filed suit against Lulu on that day.
“This context and timing – Peloton representing that it would likely not be ready to submit a response as requested, proposing a new deadline by which to respond, and then instead filing the declaratory judgment suit on that date – supports a finding that this suit is an improper anticipatory declaratory judgment action,” Judge Carter states in his order. And noting that “the balance of convenience favor[s] neither party” in the case at hand, the judge granted Lulu’s motion to dismiss.
While one case is off the table, the one that Lululemon filed against Peloton is still in play and slated to resume following a suspension for the duration of the Peloton v. Lulu matter.
UPDATED (Sept. 30, 2022): The parties have settled the remaining matter, with counsel for Lululemon filing a notice of voluntary dismissal with the U.S. District Court for the Central District of California. The dismissal is with prejudice. In a statement, the parties revealed that they “have negotiated a mutually agreeable settlement, and are pleased the matters could be resolved amicably, resulting in dismissal of the pending litigation between them.” While the full extent of the agreement has not been made public, Peloton agreed to discontinue “certain designs” that Lululemon had objected to in the suit, albeit, without the company revealing any wrongdoing.
The cases are Peloton Interactive, Inc. v. Lululemon Athletica Canada Inc., 1:21-cv-10071 (SDNY), and Lululemon Athletica Canada, Inc. v. Peloton Interactive, Inc., 2:21-cv-09252 (C.D.Cal.)
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