NKE vs. LULU: Lululemon Now Faces Legal Battle with NIKE

By Kirsteen Mackay

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Nike filed a lawsuit accusing Lululemon of patent infringement over its Mirror fitness device and related applications. LULU is also battling PTON.

NKE vs LULU - Image from Unsplash

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Lululemon Athletica (NASDAQ: LULU) is being sued by NIKE (NYSE: NKE) accused of patent infringement over its Mirror fitness device and mobile app. This comes just weeks after a similar case emerged between Lululemon and Peloton Interactive (NASDAQ: PTON) over claims Peloton infringed on Lululemon's bra and leggings design patents.

While the NIKE case accuses LULU of patent infringement, the Peloton case has LULU as the accuser. After Lululemon threatened to sue Peloton, the notorious spin bike manufacturer got in there first by filing a suit stating there is no merit to Lululemon's claims.

Lululemon quickly responded with a patent lawsuit of its own against Peloton.

Confused much? Suffice to say, Lululemon will be subject to legal fees, and this does not bode well for the stock.

NIKE takes a stand

Lululemon acquired Mirror for $500m in 2020. With the flight to working out from home, this seemed a strategic move. Now NIKE states LULU infringes on several of its historical patents by selling its Mirror fitness device. In recent years, NIKE itself has launched a series of popular mobile apps, including Nike Run Club and Nike Training Club.

A spokesperson for Lululemon told CNBC:

“The patents in question are overly broad and invalid. We are confident in our position and look forward to defending it in court.”

While these cases may swing in Lululemon's favor, at this point, nothing is certain. Shareholders do not like uncertainty, negative press, and unnecessary spending on court proceedings.

FactSet analysts give all three of these stocks an Overweight rating.

The consensus sees NKE stock with a long-term growth rate of 16.4%. Meanwhile, LULU stock has a long-term growth rate of 29% and PTON stock 51%.

Despite the ongoing court battles, it's worth keeping these popular fitness stocks on your radar.

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Topics:
Fitness and Wellbeing
Industries:
Consumer Discretionary
Companies:
Nike
Lululemon Athletica
Peloton Interactive

Author: Kirsteen Mackay

This article does not provide any financial advice and is not a recommendation to deal in any securities or product. Investments may fall in value and an investor may lose some or all of their investment. Past performance is not an indicator of future performance.

Kirsteen Mackay does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the above article.

Kirsteen Mackay has not been paid to produce this piece by the company or companies mentioned above.

Digitonic Ltd, the owner of ValueTheMarkets.com, does not hold a position or positions in the stock(s) and/or financial instrument(s) mentioned in the above article.

Digitonic Ltd, the owner of ValueTheMarkets.com, has not been paid for the production of this piece by the company or companies mentioned above.