Maintaining a sense of ownership can be challenging, especially in the world of AI, where dupes and social media content proliferate unchecked. To make matters worse, laws around ownership or intellectual property in the United States are loose at best. This tension recently came to a head on June 25, 2025, when lululemon filed a lawsuit against Costco. In it, lululemon claimed the corporation was selling copycat versions of its popular athletic wear.
It’s reasonable to think that creators, from bloggers like me to clothing brands like them, are experiencing loss aversion when they see their work replicated elsewhere. (Loss aversion describes the phenomenon in which something framed as a loss feels worse than that same thing framed as a gain. More on this later!) With this in mind, is lululemon exhibiting an aversion to loss in its lawsuit against Costco? And is this strategic or reactionary?
The Lawsuit
On June 25, 2025, lululemon filed a lawsuit, claiming that Costco has been selling counterfeit versions of its Scuba sweatshirts and hoodies, men’s ABC pants, and Define jackets. In its 45-page court filing, the retailer also claimed that Costco is using the same name (“Tidewater Teal”) that lululemon uses to describe a shade of material.
What is Loss Aversion?
First of all, let’s talk about loss aversion a bit more. I can explain it best using an example: let’s say someone gave you $10. That’s great; now you can buy yourself an overpriced matcha latte and a sweet treat! If someone stole $10 from your wallet, by contrast, loss aversion suggests that you would be more upset about this loss than you would be excited about gaining the $10.
Lululemon is a huge company, so I’m sure they’re not worried about a mere $10. It reached more than $10 billion in revenue in 2024. The reason I believe they are experiencing this behavioral phenomenon is because of the increasing issues of ownership in our modern life.
Issues of Modern Ownership Amidst Dupe Culture
Compared to a decade or two ago, when dupes were considered taboo, they are now relatively mainstream. On TikTok, videos using the hashtag “dupe” have racked up billions of views.
For example, consider last year when Walmart started selling a copycat version of Hermès’ famous Birkin bag. The Walmart version, sold by the brand Kamugo and often referred to as a “wirkin,” sold for $78. That is roughly 9% of what an authentic Birkin bag sells for, which is around $9,000.
Hermès Executive Chairman Axel Dumas expressed that “making a copy like this is quite detestable” during an earnings call in February 2025. What are companies to do, though, when they have to contend with ultra-fast fashion giants like Temu and Shein, the latter of which can create new designs in just three days?
In addition to the sheer volume of e-commerce platforms that create and disseminate these dupes (which include eBay, Mango, and H&M), it’s not enough to show that somebody copied a product. The original company also has to prove that the knockoff is misleading customers – tricking them into thinking they’re buying the real deal.
That burden falls squarely on the original brand, according to trademark attorney Karl Zielaznicki of Troutman Pepper Locke. He told Forbes that it’s a tough case to make: “Customers usually know they’re not getting a $5,000 watch for a hundred bucks… They realize it’s a lookalike, not the real thing,” he said.
In other words, with this lawsuit, lululemon will need to demonstrate that Costco is intentionally attempting to deceive its customers. This intentionality will be challenging to prove because copyright laws are notoriously complex and unclear.
With fashion, in particular, we’re going to get into some thorny questions. That includes what intellectual property rights exist and how enforceable they are, and whether there is actual infringement or if a product is just “positioning itself as a less expensive alternative.
– Alexandra Roberts, a professor of law and media at Northeastern University, to The Associated Press.
Lululemon’s Past Lawsuits
Lululemon is no stranger to lawsuits: in 2021, it sued Peloton because some items in its then-new clothing line were considered “copycat products.” Consequently, the two companies announced a five-year partnership two years later, in which lululemon became Peloton’s leading partner for athletic apparel as part of the agreement.
In 2012, lululemon sued Calvin Klein, claiming that it had copied the signature waistband design from Lulu’s “Astro” yoga pants. Lululemon ultimately withdrew its lawsuit and settled with Calvin Klein out of court. It’s yet another example of the company trying to claim its territory and protect its designs.
Several other companies have attempted to protect their intellectual property via lawsuits over the last few years. While lululemon isn’t unique in this regard, what strikes me most about this lawsuit is that the company must have been aware of the risk that it would draw public attention to the similarities between its products and those of Costco and that consumers would likely stock up at Costco due to its lower prices.
Lululemon and Loss Aversion
As of June 2025, lululemon’s stock price is down 30% from this time last year, even though there has been a 7% rise in overall sales during that time. With this in mind, in addition to looming tariffs and a potential recession, it didn’t immediately make sense to me why lululemon would risk losing sales to Costco by submitting this lawsuit. That’s why I believe it’s operating from a perspective of loss aversion.
Take this example: Michelle del Rio is a womenswear designer based in Paris. She told Business of Fashion about a skirt she found online, which was a $100 copy of her $325 Soledad skirt. She told Business of Fashion, “It scared me. I was like ‘That’s going to cut all of the income I make and limit future collections, it’s going to create confusion in the marketplace.”
While del Rio runs a much smaller business than lululemon, it doesn’t mean the larger company is immune from having feelings about what’s going on.
Like del Rio, lululemon is likely tired of seeing other companies mimic their designs and steal a portion of the market share. Alternatively, lululemon may be standing up for all the other companies whose original designs have been copied, potentially creating a legal precedent if it wins the case. Either way, in light of consumer trends, which have been leaning towards frugality, the lawsuit feels reactionary to me.
Lindsey’s Verdict on The Lululemon Lawsuit
It’s hard to know how this will play out in court, but if nothing else, this lawsuit has shone a light on the proliferation of dupes in our consumer culture today. By submitting the lawsuit, lululemon demonstrates the significant threat that dupes pose to its business, thus underlining a cultural shift. Now, counterfeits and copies are no longer something to be ashamed of, as they once were.
Finally (and bear with me), the lawsuit humanizes lululemon in a way I didn’t expect before diving deep into research for this article. Juxtaposing the business risk (losing sales to Costco) with the emotional aspects of loss aversion, it’s clear to me that lululemon is trying to take back what it feels is rightfully theirs. As a small blog, I would feel negatively if someone was copycatting what I’m creating authentically, so I really can’t blame lululemon for wanting to do the same.
Still can’t get enough? Check out this 12 minute video from CNBC about lululemon’s domination in the activewear space.
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