Last week, Lululemon made headlines after filing a lawsuit against Calvin Klein for patent infringement. In a recent report by Reuters, a retail analyst and an intellectual property expert take a look at the underlying motives for the lawsuit – and it’s not about the money.
Patent lawsuits are uncommon in apparel and can be difficult to win. The suit could deter imitators, and thus help the Vancouver-based company cement its growth. It also highlights how tough the competition is.
“This is a low barrier-to-entry industry. Lululemon, their success, has drawn new competitors throughout the mall,” said independent retail analyst Brian Sozzi. “The valuation is so high. It’s tough to warm up to a stock when you see so many new competitors.” [Reuters]
Apparently, investors are expressing a “growing unease over the company’s future” and shares of the company have fallen 17% in the past quarter. Lululemon is also up against apparel industry heavyweights such as Nike and Under Armour, as well as Gap’s Athleta and Lolë where products of similar quality and design retail for 30% – 40% less.
“The business strategy is to deter other people from even trying to copy designs, because it’s going to cause them legal problems,” said law professor Jeremy de Beer.
Lululemon has been putting its goal setting techniques to practice, aiming to double North American stores to 350 over the next few years. And it looks like it will go to all lengths, including aggressively intimidating any company that tries to make stretchy pants with wide, flattering waistbands.
This lawsuit is the latest in a string of Lululemon’s questionable business practices, nicely summarized on Digital Citizen.
On a side note, I just have to say that image searches for yoga pants involve venturing into one of the seedy underbellies of the Internet (there are many), where I found things like this rock radio station’s “Hot Yoga Pants Contest.”