Peloton Interactive, Inc. v. Lululemon Athletica Canada Inc.
- Andrew Carter
- 1:21-cv-10071
- U.S. District Court · Southern District of New York
- 9
In Peloton v. Lululemon, Judge Carter dismissed Peloton’s declaratory-judgment suit as an anticipatory filing after Lululemon threatened litigation by a deadline.
Peloton’s declaratory-judgment action was dismissed, while Lululemon’s separate infringement action was not decided by this opinion.
What happened
Peloton Interactive, Inc. v. Lululemon Athletica Canada Inc. concerned a dispute over apparel designs, patents, and trade dress after the parties ended a co-branding relationship. Lululemon sent Peloton a cease-and-desist letter threatening federal litigation if Peloton did not comply by a specified deadline, and Peloton filed this case seeking declarations that it had not infringed and that Lululemon’s patent and trade-dress rights were invalid or nonexistent.
Lululemon asked the court to dismiss Peloton’s case as an improper anticipatory declaratory-judgment action. The court concluded that Lululemon’s letter gave clear notice of an intended lawsuit, identified the types of claims it would bring, and set a deadline. The court also found that the convenience factors did not favor either court.
Judge Carter granted Lululemon’s motion to dismiss and dismissed the action. The court also granted both parties’ motions to seal and closed the case.
The detailed version
- Peloton Interactive, Inc. v. Lululemon Athletica Canada Inc. · No. 1:21-cv-10071
- Andrew Carter
- Sept. 29, 2022
Background
Peloton Interactive, Inc. sued Lululemon Athletica Canada Inc. for a declaratory judgment. Peloton sought declarations that several Peloton apparel products did not infringe Lululemon’s patents or trade dress, that the patents were invalid and unenforceable, and that Lululemon had no trade-dress rights in the designs at issue.
The parties had entered a co-branding agreement in 2016. In 2021, Peloton ended that partnership and began its own private-label apparel brand. On November 11, 2021, Lululemon sent Peloton a cease-and-desist letter alleging that six Peloton apparel products infringed Lululemon patents and trade dress. The letter demanded that Peloton stop the alleged infringement and respond by November 19, stating that Lululemon would otherwise file a federal lawsuit asserting patent infringement, trade-dress infringement, and trade-secret misappropriation.
Peloton filed this declaratory-judgment action on November 24, 2021. Lululemon filed a separate patent- and trade-dress-infringement lawsuit in the Central District of California on November 29, 2021, and moved to dismiss Peloton’s action.
Legal standard and analysis
The court applied Second Circuit law to non-patent issues and Federal Circuit law to issues sufficiently connected to patent law. Both bodies of law recognize exceptions to the general rule that the first-filed lawsuit receives priority. One exception applies when the first-filed lawsuit is an improper anticipatory declaratory-judgment action—meaning a party files for a declaration in response to a specific threat of litigation, thereby taking away the opposing party’s choice of forum.
The court held that Peloton’s action was anticipatory. Although Lululemon’s letter did not identify the court where it would sue or a specific filing date, it clearly stated that Lululemon intended to file suit in federal court, identified the claims it would bring, and set a deadline for Peloton to comply with Lululemon’s demands.
The court also considered the parties’ communications and the timing of the filing. Peloton told Lululemon that it might not be able to respond by the November 19 deadline. Lululemon agreed to consider a new deadline after Peloton proposed one. According to the opinion, Peloton then filed this action on the agreed November 24 deadline instead of responding to the cease-and-desist letter. The court found that these circumstances supported dismissal as an improper anticipatory filing.
The court further considered convenience factors, including the locations of potential witnesses, the location of relevant events, and the location of corporate records. It found the factors neutral overall. Potential witnesses and relevant events were located in both jurisdictions, and electronic transfer made the location of Peloton’s records relatively unimportant. Because the action was anticipatory and the convenience factors did not favor Peloton’s chosen forum, dismissal was warranted.
Disposition
The court granted Lululemon’s motion to dismiss and dismissed the action. The court also granted both parties’ motions to seal, directed the clerk to terminate the specified motions, and closed the case.
Read the full 9-page opinion on CourtListener, the free public archive maintained by the Free Law Project.