What is intellectual property in the fashion industry?

Intellectual property in fashion includes unique design elements, logos, patterns, and brand identities that companies create and own. While fashion designs themselves are often difficult to copyright in the US, companies can protect certain aspects through trademarks, trade dress protection, and patents. A successful lawsuit like Lululemon's against Costco could strengthen these protections, making it harder for mass-market retailers to create lookalike products.

How could the Lululemon lawsuit affect these stocks?

If Lululemon wins its lawsuit against Costco, it could establish a legal precedent that makes it easier for premium brands to protect their unique designs from imitation. This could potentially boost revenue and profit margins for the companies in this group by reducing competition from lower-priced "inspired" versions, preserving their brand exclusivity, and maintaining their ability to charge premium prices.

What is trade dress protection?

Trade dress protection refers to the visual appearance of a product that signals its source to consumers. This includes distinctive packaging, color schemes, or design elements that people associate with a particular brand. For example, Louboutin's red-soled shoes or Tiffany's blue boxes. The Lululemon lawsuit involves trade dress claims, arguing that Costco's products mimic the distinctive look and feel of Lululemon's designs in a way that could confuse consumers.

Why do these companies care about copycat products?

Premium apparel and accessory companies invest heavily in designing unique products, using quality materials, and marketing to build distinct brand identities that justify higher prices. When mass retailers create similar-looking products at lower price points, it can dilute brand exclusivity, potentially reduce sales, and undermine the perceived value of the original designs. Strong IP protections help these companies maintain their competitive advantage and pricing power in the market.

16 handpicked stocks

Brand IP Guardians

A collection of premium apparel and accessory companies with strong intellectual property and brand identities. These companies could benefit if Lululemon's lawsuit against Costco establishes a legal precedent protecting fashion designs from imitation.

Han Tan | Market Analyst

Updated 2 days ago | Published at July 2