Dive Brief:
- Urban Outfitters Inc. was granted a favorable verdict in a trade secrets lawsuit last week, which now-defunct apparel rental service Le Tote filed in 2020.
- A federal judge in the U.S. District Court for the Eastern District of Pennsylvania granted the civil judgment in favor of Urban Outfitters following a unanimous jury verdict, per court documents. The jury’s notes and verdict were not available as of Monday.
- Le Tote filed the initial complaint against Urban Outfitters in June 2020, two months before filing for bankruptcy, along with department store chain Lord & Taylor, which Le Tote acquired in 2019. The Saadia Group bought Lord & Taylor in 2021.
Dive Insight:
Le Tote’s initial complaint accused Urban Outfitters, parent company of its namesake brand, rental service Nuuly, Anthropologie and Free People, of violating the Federal Defend Trade Secrets Act and the Pennsylvania Uniform Trade Secrets Act as well as breach of contract, unfair competition and unjust enrichment.
The complaint centered on Urban Outfitters’ interest in acquiring Le Tote in March 2018, prior to its launch of Nuuly, per the documents. Le Tote attorneys alleged that the company provided Urban Outfitters “with detailed Proprietary Information about its infrastructure, reverse logistics, and warehouse systems and algorithms, as well as market research and insights that have proved essential to the successful operation of a fashion rental subscription business.”
Urban Outfitters launched Nuuly in May 2019 as a monthly subscription service for its own brands as well as third-party labels and vintage pieces.
“URBN has been successfully building billion-dollar fashion brands from the ground up for more than 50 years,” an Urban Outfitters spokesperson said in an email to Fashion Dive. “We built and launched Nuuly in 2019 the same way we’ve created all our beloved and industry-shaping brands — with creativity, integrity, and a highly experienced internal team. We appreciate the judge and jury fairly evaluating all evidence presented and wrapping this trial up quickly so all parties can move forward.”
In Urban Outfitters’ most recent earnings report in February, the company said Nuuly increased its net sales by $20.3 million, driven by a 56% increase in active subscribers year-over-year.
The company has been expanding its rental service recently. In February, it opened a new fulfillment center for Nuuly in Missouri, which is expected to create 750 jobs over the next five years and provide the company with capacity to triple its active subscriber base. Last year, it partnered with plus-size DTC brand Eloquii to diversify its product offerings.
