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.)

Nike and adidas have settled a number of matters, including short-lived patent lawsuit, over their respective knitted footwear technology. On the heels of Nike filing suit against adidas in a federal court in Portland last year, arguing that the German sportswear titan made unauthorized use of its “game-changing” – and patent protected – Flyknit technology (which it spent more than a decade and upwards of $100 million dollars researching and developing) for a rival collection of “Primeknit” shoes, the parties alerted the U.S. District Court for the District of Oregon that “they have reached a settlement of the matter in litigation such that the case is dismissed without prejudice,” with each party bearing its own attorneys’ fees and costs. 

Nike first lodged its patent infringement complaint against adidas in December 2021, alleging that in lieu of engaging in innovation, adidas has spent “much of the past decade challenging several of Nike’s patents directed to Flyknit technology,” and has “continued to use Nike’s patented technology without permission.” As a result, Nike claimed that “adidas offers dozens of footwear products that infringe [its] patents, including many of adidas’s so-called ‘Primeknit’ shoes.” In the since-settled case, Nike specifically alleged that adidas was infringing nine of its 300-or-so utility patents for the Flyknit tech “by making, using, offering for sale, selling, and/or importing into the United States footwear products that practice the claimed inventions,” all of which center on “a novel method of designing and manufacturing uppers that allows Nike to use yarns made of recycled materials and to knit the upper to the exact shape necessary.” 

According to Nike’s complaint, “adidas announced its Primeknit shoes five months after Nike announced Flyknit, [and] the industry immediately took note of the similarities between Nike’s patented Flyknit technology and the adidas’s Primeknit offerings.” Instead of seeking a “license to any of Nike’s patents covering Flyknit technology, adidas opted to challenge several of them, all while marketing a number of different infringing shoe styles and following on Nike’s innovation coattails into other sports,” the Swoosh asserted, setting out nine claims of patent infringement and seeking injunctive relief and enhanced damages. 

At the time of filing, adidas pushed back against Nike’s allegations, stating, “Our Primeknit technology resulted from years of dedicated research and shows our commitment to sustainability.”

Nike and adidas knitted sneakers
Nike’s Flyknit (top) & adidas’ Primeknit (bottom)

Prior to the parties’ settlement, the case had been put on hold, with the court granting adidas’ unopposed motion to stay the case pending the outcome of a U.S. International Trade Commission (“ITC”) investigation. On the same day that Nike filed suit against adidas, it also requested that the ITC institute an investigation of adidas based on its “unlawful and unauthorized importation into the United States, sale for importation, and/or sale within the United States after importation of certain knitted footwear products that infringe Nike’s patents protecting its Flyknit technology.” That proceeding – in connection with which Nike is looking to get the federal trade body to block the import of adidas’ allegedly infringing Primeknit footwear – has similarly been settled.

A Separate Squabble

The settlement extends to additional (but related) fights between Nike and adidas, including the patent lawsuit that pitted the sportswear giants against one another for almost a decade over Nike’s U.S. Patent No. 7,347,011, which is the original patent in its “Knitted Textile Upper Family.” Adidas initially filed a petition for inter partes review (“IPR”) in 2013, challenging the patentability of an array of claims in Nike’s and the Patent Trial and Appeal Board (“PTAB”) instituted a review.

The proceedings saw Nike seeking to amend its patent by cancelling the challenged claims (claims 1-46) and adding substitute claims. Pushing back, adidas argued that the substitute claims, which concern “a single flat-knit textile element,” are unpatentable in light of three examples of prior art. While the PTAB granted Nike’s request to cancel the claims, it refused to allow the Swoosh to add the substitute claims due to the prior art, prompting Nike to appeal to the U.S. Court of Appeals for the Federal Circuit. (The appeals court affirmed the PTAB’s findings that the substitute claims are unpatentable and that Nike had the burden to prove the patentability of the substitute claims.)

Fast forward to 2020, and the matter landed before the Federal Circuit again, with Nike taking issue with the PTAB’s determination that its substitute claim 49, which focuses on “a knit upper with apertures for laces made by omitting stitches in the knit,” is not patentable, among other things. (The court made such a decision based not on the previously-cited prior art references but on separate prior art.) Siding with Nike, a panel for the appeals court stated in a decision in April 2020 that the PATB may raise unpatentability grounds sua sponte when reviewing a motion to amend a claim in an IPR proceeding. Specifically, the Federal Circuit held that the PTAB may, in fact, cite prior art or other invalidity grounds not raised by the challenging party (adidas, here), provided it gives the parties notice and opportunity to respond before issuing a final decision. 

As recently as this month, that since-settled case landed back before the Federal Circuit for the third time in nine years, with counsel for Nike arguing that in the face of a challenge from the PTAB, a petitioner (adidas in this case) bears the burden of persuasion. (According to Bloomberg, a panel of judges to the Federal Circuit “seemed skeptical” during an oral argument on August 1 that Nike Inc. “would have saved a patent claim regardless of whether Adidas had the burden of persuasion after [the PTAB] raised its own challenge” to Nike’s patent.)

The cases are Nike, Inc. v. adidas AG, 3:21-cv-01780 (D. Or.); Adidas AG v. Nike Inc, 2:22-cv-00198 (E.D.Tex.); and In the Matter of Certain Knitted Footwear, No. 337-TA-1289 (ITC).

The U.S. Copyright Office and the U.S. Patent and Trademark Office confirmed that they will carry out a joint effort to examine issues related to non-fungible tokens (“NFTs”) amid rising questions – and legal disputes – centering on the novel technology. News of the impending intellectual property and NFT-centric study follows from a formal request from Senators Patrick Leahy and Thom Tillis, who respectively serve as the Chairman and Ranking Member of the Judiciary Subcommittee on Intellectual Property, that the two offices undertake a joint initiative to help the Subcommittee to understand “how NFTs fit into the world of intellectual property rights,” including what those rights look like today and how they may evolve in the future.

In a letter to U.S. Patent and Trademark Office Under Secretary of Commerce Kathi Vidal and the Copyright Office Director Shira Perlmutter dated June 9, Senators Leahy and Tillis stated that “NFTs are already in global use today and their adoption continues to grow since their relatively recent introduction,” with NFTs being “found in nearly all spheres – from academia to entertainment to medicine, art, and beyond.” Against this background, the Senators set out a list of “non-exhaustive considerations” that they requested the U.S. Patent and Trademark Office and the Copyright Office address, including … 

(1) What are the current applications of NFTs and their respective IP and IP-related challenges?

(2) What potential future applications of NFTs do you foresee and what are their respective potential IP challenges?

(3) For current and potential future applications of NFTs: 

– How do transfers of rights apply? How does the transfer of an NFT impact the IP rights in the associated asset?

– How do licensing rights apply? Can and how can IP rights in the associated asset be licensed in an NFT context?

– In what way does infringement apply? What is the potential infringement analysis where an NFT is associated with an asset covered by third party IP? Or where the underlying asset associated with an NFT is owned by the NFT creator and infringed by another?

– What intellectual property protection can be afforded? What IP protection can be afforded to the NFT creator? What if the NFT creator is a different person or entity from the creator of the associated asset?

– How else does 17 U.S.C. § 106 apply?

(4) What are current and potential future uses, internal and external to your agencies, for using NFTs to secure and manage IP rights?

(5) How do current statutory protections for copyright, such as the DMCA, apply to NFT marketplaces and are those protections adequate to address current infringement concerns?

The Senators requested that the U.S. Patent and Trademark Office and Copyright Office complete the study by July 2023, which likely means that there very well “may be market-driven answers to many of these questions before the study is published,” according to Proskauer partners Jeffrey Neuburger and Wai Choy, who point to the “pace of innovation in the NFT and crypto space and the current crop of active litigations concerning IP issues and NFTs.” More than that, they note that “as technology, creativity and business models continue to evolve at an incredibly rapid pace, there will likely be new issues to consider” by this time next year. 

To date, a growing number of cases that center on NFTs are increasingly shedding light on the “respective IP and IP-related challenges” at play in this space – from questions of whether alleged trademark infringements stemming from the use of NFTs as “receipts” for physical goods can be shielded by the first sale doctrine and/or nominative fair use (one of the issues in the Nike v. StockX case) to whether the copyright in a major film is infringed by the offering up of NFTs tied to uncut scenes (this is at issue in the Miramax v. Tarantino case, which, more specifically, asks whether Tarantino’s reserved right to screenplay publication extends to Pulp Fiction-centric NFTs) – thereby, answering at least part of the Senators’ first question. 

At the same time, courts, trademark offices, and regulators, alike, have started to provide some high-level insight into how they view NFTs. In an order in May, in which he denied MetaBirkins creator Mason Rothschild’s motion to dismiss the case that Hermès filed against him, Judge Jed Rakoff of the U.S. District Court for the Southern District of New York shed light on how NFTs should be construed, describing NFTs as “units of data stored on a blockchain that are created to transfer ownership of either physical things or digital media.” While an NFT can be associated with either digital and physical assets, the judge stated that those assets “are stored” – and ultimately, exist – “separately” from the digital tokens, themselves. 

In that same order, in refusing to toss out Hermes trademark infringement and dilution claims, the judge suggests that the trademark rights that brands have amassed for use on purely physical goods could very well extend into the metaverse and allow for claims in the event that the assets tied to the NFTs – or potentially, just virtual goods themselves that are not tied to NFTs at all – are capable of functioning in the metaverse. (As we wrote last month, Hermès has not yet made use of the protected Birkin name or trade dress in connection with any virtual products or NFTs, but that seemingly does not stop its existing “real” world rights from extending into the virtual world.) 

In terms of issues involving NFTs and the Digital Millennium Copyright Act, at a baseline level, Skadden’s Stuart Levi, MacKinzie Neal, and Anita Oh state that “the application of the DMCA to NFT marketplaces is straightforward: NFT marketplaces can take advantage of the DMCA safe harbor by describing how a copyright owner can submit a DMCA takedown notice, and then implementing that process, including by allowing the individual or entity listing an NFT to provide a counter notification through which they can assert their own rights.” 

Matters are complicated, of course, by the fact that NFTs, themselves, do not consist of digital art or other assets; NFTs are digital tokens that may “point to a copy somewhere off-chain on the internet (e.g., on a server),” per Proskauer’s Peter Cramer and David Munkittrick. “For a content creator who discovers a counterfeit NFT of his or her art, this means that notice-and-takedown is mostly limited to targeting and removing that NFT’s marketplace listing (that is, the specific Web 2.0 page at which the NFT is offered for sale and the associated art is displayed), but leaving the technically non-infringing token, itself, undisturbed on its blockchain, continuing to point anyone who accesses it to the off-chain unauthorized copy of the art.” (This reality speaks to the Senators’ inquiry about how current protections for copyright, such as the DMCA, apply to NFT marketplaces and are those protections adequate to address current infringement concerns.)

Finally, while the Senators rightly note the rise in popularity and use of such tokens across industries, the state of the NFT market, more broadly, is not necessarily so straightforward. “It is difficult to get an accurate pulse on NFT markets,” Amy Castor wrote for Art News this spring, stating that “reports tend to be inconsistent” and “most of the data on NFTs comes from the platforms themselves,” with no way of really gauging whether trading volume is legitimate or the result of wash trading, an illegal stock trading practice in which “users buy and sell the same item to themselves as a way to artificially inflate numbers.” 

Brooks is on the receiving end of a new lawsuit, with the sneaker-maker being accused of trademark and patent infringement and unfair competition by rival PUMA. According to the complaint that it filed in a federal court in Indiana on July 8, PUMA claims that Brooks is not only infringing its NITRO trademark by selling sneakers bearing that mark but goes further by using the NITRO mark on a sneaker that includes “every aspect” of a sneaker for which PUMA has a design patent in furtherance of what PUMA calls a larger “pattern of [Brooks of] copying [its] technology and disrespecting [its] intellectual property rights.” 

In the newly-filed complaint, PUMA asserts that it has been using the NITRO mark on and in connection with various footwear since at least March 2021 and points to a pending trademark application for registration with the U.S. Patent and Trademark Office for the mark, noting that its NITRO-branded running shoes are “currently [its] top-selling running shoes in the U.S., and an overall top-five-selling brand of PUMA footwear in the U.S.” Having invested “significant time, energy, and resources in promoting and offering its NITRO-branded products,” PUMA claims that it has developed “substantial and valuable goodwill in its NITRO mark and owns strong common law rights in the NITRO mark across the U.S. relating to footwear, including in Indiana.” 

Puma Lawsuit
One of Puma’s NITRO sneakers

Against this background, PUMA alleges that in late 2021, it became aware that Brooks had begun using NITRO to advertise its running shoes. Following a failed attempt to settle the matter between themselves and “with the knowledge that the NITRO mark was used and owned by PUMA,” Brooks has moved forward with “an infringing advertising campaign that makes extensive use of PUMA’s NITRO mark,” per PUMA, including social media posts that specifically include the “#RunOnNitro” hashtag.

“Brooks’ actions have caused or are likely to cause significant harm to PUMA’s reputation and the hard-earned goodwill that PUMA has developed in its NITRO mark,” per PUMA, which alleges that “consumers seeing Brooks’ use of such a confusingly similar mark in the marketplace are likely to believe that Brooks’ products are the same as PUMA’s or sponsored by, associated with, or otherwise affiliated with PUMA.”

Not finished, PUMA further asserts that Brooks has made matters even worse by offering up a sneaker in its NITRO collection – the Aurora BL sneaker – that makes use of the design reflected in the design patent (no. D897,075) that was issued to PUMA in 2019. The allegedly infringing Aurora BL shoe “has adopted every aspect of the claimed design in PUMA’s patent,” the German sportswear company claims, arguing that it “has an overall appearance that is substantially the same in the eyes of the ordinary observer.” PUMA argues that “an ordinary observer, familiar with the prior art designs … would be deceived into purchasing the Brooks’ product, assuming it to be the patented design.” 

(Reflecting on the strength of Puma’s design patent infringement claim, Sarah Burstein, a professor at Suffolk Law, stated on Twitter that the claim should be tossed out, as “design patents protect the actual shape claimed, not the larger design concept.” They also “quite rightly require a very high degree of visual similarity,” which seems to be missing here. Beyond that, Burstein noted that “design patents don’t claim ‘features’ per se. They claim the entirety of whatever is shown in solid lines, as a unified whole. We don’t chop up design claims into ‘limitations,’ like we do for utility patents.”)

Puma Lawsuit

In addition to the “deceptive” similarity of Brooks’ sneaker to the sneaker design protected by PUMA’s design patent, PUMA claims that Brooks has also co-opted its “proprietary foam molding process [for] the Aurora BL shoe and [for] the line of shoes it sells in connection with the infringing NITRO mark.” Specifically, PUMA alleges that after it released its NITRO-branded shoes, “Brooks contacted one of PUMA’s manufacturers to copy PUMA’s technology and incorporate PUMA’s technology into Brooks’ shoes.” 

Moreover, PUMA contends that on December 28, 2020, one month after it first released its NITRO-branded shoes and nearly a year after it lodged its first utility application filing for its foam molding technology (which is still pending before the USPTO), Brooks filed its own utility patent application (no. 17/134,560), which “describe[s] the same foam molding process that PUMA uses in its NITRO-branded shoes.” And all the while, Brooks allegedly “applied for its own industrial design protection for the design of the Aurora BL shoe just one month after PUMA’s ’075 patent issued” in September 2020, per Puma. 

With the foregoing in mind, PUMA says in the lawsuit that it is looking “to prevent Brooks from causing confusion in the marketplace and unfairly benefitting from PUMA’s reputation and goodwill” by seeking injunctive relief (and monetary damages) to preliminarily and permanently enjoining Brooks from using PUMA’s NITRO mark in connection with the manufacture, distribution, advertising, promotion, offering for sale, and/or sale of Brooks shoes. At the same time, it is also seeking permanent injunction and monetary damages stemming from Brooks’ alleged infringement of its design patent. 

The PUMA case comes days after Skechers filed a trademark lawsuit against Brooks, accusing its fellow sneaker-maker of infringing – and diluting – its “famous ‘S’ logo” by using a “confusingly similar ‘5’ mark” on footwear, a segment of the market in which competition is significant, R&D costs are high, and thus, litigation is rampant.

A rep for Brooks told TFL, “Puma is abusing trademark law by seeking to prevent competitors from using the term ‘nitro’ to describe nitro-infused shoes. Brooks is not infringing any of Puma’s intellectual property, and all of Puma’s allegations are baseless.”

The case is PUMA SE, et al. v. Brooks Sports, Inc., 1:22-cv-01362 (S.D. Ind.).

Adidas has named Nike in a new lawsuit, accusing the Beaverton, Oregon-based company of “knowingly and intentionally” infringing nine of its patents, the latest development in an enduring battle between the market’s leading sportswear titans. According to the complaint that it filed in a federal court in Texas on June 10, adidas claims that it maintains patents for various technologies, including (but not limited to) a “location-aware fitness training device,” “performance information sharing systems and methods,” and “Intelligent Footwear Systems,” which it says that Nike is infringing by way of its Nike Run Club, Training Club, and SNKRS apps, among others.

In the newly-filed complaint, as first reported by Reuters, adidas asserts that it “has long had a culture of innovation, research and development,” and in furtherance of its efforts “to innovate and change sports through technology, [it] has made continuous investments in sports science, sensor technology, wearables and digital communication platforms.” Among these innovations are “technology related to mobile fitness and mobile purchases, [as] adidas was the first in the industry to comprehensively bring data analytics to athletes.” 

As a result of such innovation, adidas owns over 800 patents, including ones for the tech embodied in its various apps, which it claims that Nike is infringing via its Nike Run Club and Training Club, SNKRS, and Nike Adapt apps. Specifically, adidas assets that Nike’s SNKRS app infringes one of its patents (10,275,823) that extends to “a computer-implemented method implemented in a customer device for ensuring customer authenticity of an electronic reservation for a product from a retailer by generating reservations only if threshold authentication conditions are satisfied.” Nike’s Training Club app, on the other hand, allegedly infringes an adidas patent (8,814,755) by providing “a method for sharing information about a first individual who has engaged or is engaging in a first physical activity” by “wirelessly transmitting the first performance information from the first portable performance monitoring system” to “a computing device that is not carried with the first individual during the first physical activity, and generating a visual display” based on that performance information.

Reflecting on Nike’s alleged infringement, adidas contends that the Swoosh “has been aware of its infringement of the patents-in-suit prior to the filing of this lawsuit,” with adidas pointing to the widely-reported patent infringement lawsuit that it filed against Under Armour, Inc. and MapMyFitness, Inc. in 2014, as at least two of the adidas patents that Nike has allegedly infringed were at issue in that case. In addition to allegedly being aware of that lawsuit (and the corresponding patents), adidas contends that Nike almost certainly knew about the lawsuit that it filed against ASICS – and thus, the patents at issue in that case – in 2017, which similarly centered in a number of patents related to the ones at issue in the case at hand. Finally, adidas claims that Nike’s “pre-suit knowledge of its infringement of the patents-in-suit” also extends to Nike’s practice of citing the adidas patents in its own U.S. Patents or published applications. 

In addition to being aware of the patents-in-suit, adidas claims that Nike “knowingly and intentionally induces infringement” of those patents. For example, adidas asserts that by “operating the accused [apps] in their default condition,” a customer or end user “will directly practice at least one claim of each of the patents.” Nike “induces infringement,” per adidas, “by, for example, knowing and intending that its customers and end users will commit these infringing acts.” Proof that Nike intends for its customers to use the apps and commit the infringing act? According to adidas, it instructs consumers to download – and use – the apps, stating, for example, that the Nike Run Club app is “everything you need to start running, keep running, and enjoy running more” or that the SNKRS app enables consumers to “get access to the most coveted drops and one-of-a-kind experiences.” 

With the foregoing in mind, adidas claims that it “has been and continues to be irreparably injured by [Nike’s] infringement of” the patents at issue, and in addition to injunctive relief, is entitled to recover damages “adequate to compensate it for [Nike’s] infringing activities in an amount to be determined at trial but in no event less than a reasonable royalty.” 

The lawsuit is the latest in a string of clashes between Nike and adidas, including a decade-long fight over the two companies’ rival knitted footwear technology, which recently spilled over into a proceeding before the International Trade Commission, with Nike asking the federal trade body last year to block the import of adidas’ Primeknit footwear on the basis that the sneaker tech infringes a number of its utility patents.

Not only does the new lawsuit come against a fractured background between the two titans, it comes as the companies derive notable engagement – and revenue – from their digital offerings and connected products, particularly in the wake of the pandemic. Nike revealed in March, for example, that its Digital division, which consists of various digital channels and applications (including those at issue in this case), accounted for 26 percent of company $10.9 billion in Q3 revenue and that digital sales in the U.S. were up by 33 percent on a year-over-year basis. 

A rep for Nike told TFL that the company “doesn’t comment on pending litigation.”

The case is adidas AG, et al., v. Nike, Inc., 2:22-cv-00198 (E.D. Tex.).