Dive Brief:

• On Tuesday, Patagonia sued Nordstrom in the U.S. District Court for the Central District of California Western Division in Los Angeles, alleging the company sold “thousands of counterfeit Patagonia sweatshirts and t-shirts through its Nordstrom Rack stores.”

• The brand alleges “counterfeiting, trademark infringement, unfair competition, dilution, and copyright infringement,” per court documents. In an effort to avoid litigation, Patagonia said it asked Nordstrom to pull the items, to no avail.

• “We are aware of the lawsuit and take these allegations seriously. We are currently reviewing the matter,” a Nordstrom spokesperson said.

Dive Insight:

As noted in its lawsuit, Patagonia closely safeguards its trademarks and brand. Late last year, the company took Gap Inc. to court over fleece pullover designs that Patagonia said amounted to trademark infringement.

“The brand is very protective of its intellectual property as it puts in enormous efforts to create good quality products that are made in a sustainable way,” GlobalData Managing Director Neil Saunders said by email. “Most retailers know this so should take care when dealing with the brand.”

Patagonia recently stopped selling through Nordstrom, and discovered the alleged fakes this year, per the complaint. This hurts Patagonia’s brand and reputation as well as Nordstrom’s customers, according to court documents.

After losing customers following a move to introduce cheaper products into Rack stores, an attempt to reach more budget-minded consumers, Nordstrom has worked to elevate its off-price assortments. The merchandising about-face helped Rack improve in the first quarter, executives said Wednesday. Last year, the company also shook up its Rack leadership.

Off-price retailers sell “a jumble of products,” including older designs and private labels, but “offering counterfeit items is still a no-no,” Saunders said.

“Not only does this potentially breach trademark and various other laws, it can severely erode customer trust,” he said. “While it can be difficult for off-price players to check all merchandise, it is still the job of buyers to do this. This seems to be a mistake on Nordstrom Rack’s part and could be part and parcel of it taking its eye off the ball in terms of merchandising and buying.”