## Facts

- Peloton and lululemon entered a 2016 co-branding relationship under which Peloton sold lululemon apparel co-branded with Peloton’s name.
- Peloton ended the relationship in 2021 and launched its own private-label apparel line.
- On November 11, 2021, lululemon’s counsel sent Peloton a cease-and-desist letter alleging infringement of lululemon design patents and trade dress, demanding cessation, and threatening suit by a set deadline.
- Peloton requested and received an extension to respond, moving the deadline to November 24, 2021.
- On November 24, 2021, Peloton filed an action seeking declaratory judgments of noninfringement, invalidity and unenforceability of asserted patents, and lack of protectable trade dress.
- On November 29, 2021, lululemon filed an infringement action in the Central District of California concerning the same dispute.
- The filings also included requests to seal limited materials containing asserted confidential business information.

## Issues

1. Whether the court should exercise discretion under the Declaratory Judgment Act to hear Peloton’s declaratory-judgment action or dismiss it as an anticipatory filing in favor of the parallel infringement action in California.
2. Whether the parties showed sufficient grounds to seal limited portions of filings related to the motion to dismiss.

## Decision

- The court granted lululemon’s motion to dismiss, declining to exercise jurisdiction over Peloton’s declaratory-judgment action.
- The court treated Peloton’s filing as an improper anticipatory action brought in response to a concrete threat of imminent litigation and viewed it as forum shopping.
- The court found the parallel California infringement case could resolve the parties’ overlapping patent and trade-dress dispute more conventionally and completely, and dismissal would avoid duplicative, piecemeal litigation and inconsistent rulings.
- The court granted both parties’ sealing motions, finding the requests narrowly tailored and directed at protecting confidential business information.
- The case was closed.

## Legal Principles

- The Declaratory Judgment Act is discretionary; even with an actual controversy, a federal court may decline to entertain a declaratory action.
- Courts may dismiss declaratory actions filed in response to a specific, imminent threat of suit, particularly where the filing appears designed to preempt the natural plaintiff’s forum choice.
- The existence of a parallel coercive action covering the same parties and issues strongly favors dismissal when it can resolve the dispute efficiently in a single forum and reduce the risk of inconsistent judgments.
- Sealing may be permitted where materials constitute confidential business information and the request is narrowly tailored to protect such information.

## Conclusion

The court dismissed Peloton’s declaratory-judgment action as an anticipatory suit and deferred to a parallel infringement case better positioned to adjudicate the dispute in one forum, while allowing limited sealing to protect confidential business information.


Peloton Interactive, Inc. v. Lululemon Athletica Can. Inc., 2022 WL 4585812 (S.D.N.Y. 2022)