Peloton loses lawsuit against Lululemon in year of falling sales

A Manhattan judge dismissed Peloton Interactive Inc’s year-long lawsuit against sports fashion brand Lululemon on Thursday.

Peloton launched the legal case last November, after Lululemon accused the company of infringing on its clothing patents for its best-selling bra and legging products. 

The fashion brand sent a cease-and-desist letter, to which Peloton responded with a lawsuit, seeking a declaration that it had not violated any trademarks. Days later, Lululemon also sued Peloton. 

Peloton's lawsuit has now been dismissed, meaning that Lululemon’s case will resume. 

In the federal court on Thursday, the judge described Peloton's lawsuit as “an anticipatory action that warrants dismissal”, reported Bloomberg.

Peloton declined to comment on the ruling. 

This litigation setback comes in what has been a turbulent year for the exercise bike maker. Back in February, Peloton’s chair and co-founder John Foley resigned from his role in a shift that also saw 2,800 of the company’s employees made redundant. 

Less than a month ago, the company reported a $1.2 billion loss, sending share prices plummeting as it recorded its sixth consecutive quarter of losses. 

Peloton’s stock price grew substantially during the pandemic as consumers turned to home fitness options. However, in the quarter ending 30 June 2022, Peloton reported a 28% fall in revenue, with sales falling to $678.8 million compared with $936.9 million the previous year. 

In a statement to shareholders at the time, CEO Barry McCarthy said: “The naysayers will look at our [fourth quarter] financial performance and see a melting pot of declining revenue, negative gross margin, and deeper operating losses. They will say these threaten the viability of the business. But what I see is significant progress driving our comeback and Peloton’s long-term resilience.”

Last month, the company launched a desperate bid to restructure its distribution channels, selling products through Amazon US for the first time. It has now struck a deal with American retailer Dick’s Sporting Goods and will begin selling exercise bikes, treadmills and its range of accessories in stores across the country. 

Further information on the legal cases can be found at Lululemon Athletica Canada Inc v Peloton Interactive Inc, U.S. District Court, Central District of California, No. 21-09252; and Peloton Interactive Inc v Lululemon Athletica Canada Inc, U.S. District Court, Southern District of New York, No. 21-10071.