- Seed Beauty, the company that manufactures Kim Kardashian West and Kylie Jenner’s makeup lines, believes Kylie Cosmetics gave confidential trade secrets to its competitor, Coty Inc, which Jenner sold 51% of her brand to earlier this year.
- Seed is now suing Kylie Cosmetics and Coty in an effort to stop them from sharing and using those secrets.
- The lawsuit comes just days after Seed won a temporary injunction in a similar case against KKW Beauty, which Coty recently acquired 20% of, preventing it from sharing confidential information as well.
- KKW Beauty denied claims that it shared information with Coty, and though Coty and Kylie Cosmetics have not responded to the lawsuit yet, they will likely argue that Seed’s allegations are speculative and that the secrets it claims Kylie Cosmetics shared aren’t actually trade secrets.
Kardashian-Jenner’s Strike Deals With Coty Inc.
The company behind Kylie Jenner and Kim Kardashian West’s makeup lines, Seed Beauty, is taking legal action to protect its trade secrets now that both stars have massive deals with Coty Inc.
Coty Inc. is the beauty conglomerate that owns brands like CoverGirl, Sally Hansen, Rimmel, and others. It has recently made headlines for striking million-dollar deals with the sisters in what some view as an effort to refresh their image and attract a younger audience. For some time now, Coty has been struggling to keep up with its competitors in the industry, so it seems like their new strategy is to link up with more social media-driven brands like Kardashian West and Jenner’s.
Earlier this year, Coty bought 51% of Kylie Cosmetics for $600 million, and just this week, news broke that Kardashian West sold 20% of KKW Beauty to the company for $200 million.
The deals were huge for the sisters, valuing both of their brands at around $1 billion and leaving them each with net worths of $900 million. However, the deals were pretty concerning for Seed Beauty, which partnered with Jenner since her line started in 2016, taking care of logistics, manufacturing, development, storage, and distribution.
Seed also took on the same responsibilities for KKW Beauty when Kardashian West launched the line in 2017. Now, Seed Beauty is worried that Coty has, and will continue to, get access to the secrets that it believes make Seed a strong force in the beauty industry.
Seed Beauty Sues After Kylie Cosmetics Allegedly Shares Trade Secrets
On June 30, Seed Beauty filed a civil lawsuit against Coty and King Kylie, the LLC behind Kylie Cosmetics, to prevent the misappropriation of trade secrets.
The lawsuit says that because of Coty’s inability to “successfully compete in the new digital cosmetics world through its own innovation,” the company has engaged in a plan “to steal the secret sauce behind Seed,” through its deals with the sisters.
The suit claims, “Coty made a $600 million investment in King Kylie, but it really was a subterfuge to learn Seed’s confidential business methodologies.”
“Any competitor who acquired such information would be given an unfair competitive advantage,” it adds.
The suit also alleges that Kylie Cosmetics knowingly shared Seed Beauty’s confidential intellectual property and Coty knowingly accepted that information. The complaint is highly redacted, so it doesn’t specify the secrets that Seed wants to keep private, but it could include things like information about product formulations, information about the business’ core operations, and the structure of its partnerships, according to Forbes.
Seed says it repeatedly asked Kylie Cosmetics not to share certain parts of their partnership agreement over the course of negotiations with Coty, which were rumored to have begun in June of 2019.
However, according to the suit, Jenner’s team refused to confirm or deny whether or not they had shared information. Seed also says it asked Coty not to ask for, or use, its trade secrets, but Coty similarly refused to assure Seed that it wouldn’t.
Now, Seed Beauty is asking the court to permanently bar Kylie Cosmetics from disclosing it’s trade secrets. It’s also asking that the court force Coty to promise not to use information that it’s already allegedly acquired. On top of that, it wants Coty to be prevented from developing any color cosmetics with Kylie Cosmetics for a period of time that was redacted in the suit.
“This action is to stop Coty’s theft of Seed’s pioneering and proprietary digital-first business model that has revolutionized the cosmetics industry,” the suit says.
Injunction Against KKW Beauty
But again, the Seed’s concerns don’t just focus solely on Coty’s relationship with Kylie Cosmetic. In expectation of a Coty-KKW deal, Seed filed a similar lawsuit against KKW Beauty, also seeking protection of its trade secrets.
Seed filed the lawsuit on June 19, likely after learning from its experience with her sister’s deal. KKW Beauty then filed an opposition to the lawsuit, claiming that Seed’s legal action was an “attempt to stifle the success of the Kardashian-Jenner family.” It also argued that KKW Beauty did not share any trade secrets with Coty and requested that the court compel arbitration.
KKW Beauty lawsuit reads, “The purported harm to Seed is entirely speculative, unfounded, and already complete,”
“By contrast, KKW stands to suffer comparatively more significant harm if the Court were to enter the amorphous injunction proposed by Seed.”
Ultimately, the court granted the temporary order, which lasts until August 21. That order prevents the brand from sharing details about its partnership with Seed, including “the terms of those agreements, information about license use, marketing obligations, product launch and distribution, revenue sharing, intellectual property ownership, specifications, ingredients, formulas, plans and other information about Seed products.”
Still, that court order didn’t stop Kardashian West and Coty from striking a deal, which was formally announced on June 29, and this legal situation is far from over.
It’s likely that Coty and Kylie Cosmetics will both argue that Seed’s allegations are speculative and that the secrets it claims Kylie Cosmetics shared aren’t actually trade secrets.
Still, the legal battles may be worth it in Seed Beauty’s eyes, as it has built itself quite a good reputation in the industry. According to the lawsuit, Seed goes to great lengths to protect its trade secrets by doing things like limiting access to areas of its factory, requiring all employees to sign non-disclosure agreements, and having security monitor the property.
In the Beauty space, Seed is well known for its speed and efficiency thanks to what it calls its “unique business model,” which makes it capable of turning an idea into a product within weeks. The company is not only known for working with the Kardashian-Jenner’s but is also massively successful for its own line, Colourpop Cosmetics, as well as its partnership with YouTuber Tati Westbrook for her new cosmetics line.
So it’s not surprising to see Seed go to great lengths to keep its secrets to success out of its competitor’s hands.
Coty and Kylie Cosmetics have not yet formally responded to the lawsuit or issued a public comment. The first court hearing is scheduled for October, according to Insider.
See what others are saying: (Forbes) (Business Insider) (The Fashion Law)
Apple Raises Worker Pay as Unions Gain Ground
The company’s vice president of people and retail was caught trying to dissuade employees from unionizing in a leaked video.
Labor Squeezes Apple into Submission
Apple announced Wednesday that its U.S. corporate and retail employees will see a pay increase later this year, with starting wages bumped from $20 per hour to $22, though stores in certain regions may get more depending on market conditions.
Starting salaries are also expected to increase.
“Supporting and retaining the best team members in the world enables us to deliver the best, most innovative, products and services for our customers,” an Apple spokesman said in a statement. “This year as part of our annual performance review process, we’re increasing our overall compensation budget.”
Some workers were told their annual reviews would be moved up three months and that their pay increases would take effect in early July, according to a memo reviewed by The Wall Street Journal. Furthermore, they were told the increased compensation budget would be in addition to pay increases and special awards already received within the past year.
Feeling squeezed by low unemployment and high inflation, tech companies like Google, Amazon, and Microsoft have changed their compensation structures in recent weeks to pay workers more, and Apple is the latest to bend to market pressure.
Unions Gaining Traction
On Wednesday, The Verge received a leaked video of Apple’s vice president of people and retail, Deirdre O’Brien, explicitly dissuading employees from unionizing.
“I worry about what it would mean to put another organization in the middle of our relationship,” she said. “An organization that does not have a deep understanding of Apple or our business. And most importantly one that I do not believe shares our commitment to you.”
She vocalized more anti-union talking points, like the idea that the company will not be able to make important decisions as quickly with a collective bargaining agreement.
O’Brien has been personally visiting retail stores over the past few weeks in an apparent bid to combat budding union activity.
Apple stores in three locations — New York, Georgia, and Maryland — are currently pushing to unionize, with the latter two set to vote in elections on June 2 and 15, respectively. In response to these efforts, Apple has hired anti-union lawyers, given managers anti-union scripts, and held anti-union captive audience meetings.
In the United States, unionized workers make about 13.2% more than non-unionized workers in the same sector, according to the Economic Policy Institute.
As of Wednesday, Apple’s shares had fallen 21% since the start of the year, but sales grew 34% last year to almost $300 billion.
See what others are saying: (The Wall Street Journal) (CNBC) (The Verge)
Employees at Activision Blizzard’s Raven Software Form First Union at a Major Gaming Company
Organizers say the decision has the potential to upend labor practices in the gaming industry.
Raven Software QA Testers Win Union Bid
A group of 28 workers at Activision Blizzard subsidiary Raven Software voted to form the first-ever union at a major U.S. gaming company.
While the Game Workers Alliance is a small union, organizers in the space say its formation represents a major shift for the gaming industry and will encourage others in the sector to follow suit.
The newly unionized workers are quality insurance (QA) testers working at the Wisconsin-based studio to develop “Call of Duty.” QA testers work to sort out any glitches in games, and the jobs are notoriously known for extreme crunch periods where staffers work long stretches of hours before a game’s release.
During crunch periods, employees are regularly given 12- to 14-hour shifts with just a few days off each month in order to meet release deadlines.
Many QA testers have said they are treated as second-class to others in the industry. They are paid much lower — often minimum wage or close to it — work on contract cycles and, as a result, feel disposable.
That particular sentiment was underscored for workers at Raven Software in December when the company ended the contracts of about a dozen QA testers. The decision prompted the remaining QA testers to hold a walkout and, shortly after that, they began organizing to form a union, which they dubbed the Game Workers Alliance.
Activision’s Battle Against Unionization Effort
Activision did not support the push for unionization and actively fought against it. The company refused to voluntarily recognize the union, and just days after the group filed a petition with the National Labor Relations Board, it moved QA testers to different departments across its properties.
Activision also announced it would convert over 1,000 temporary QA workers to full-time employees, give them a pay raise to $20 an hour, and provide more benefits. However, management said the move would not apply to the unionizing workers because, under federal law, they could not try to encourage workers from voting against unionization by offering pay hikes or benefits. Union leaders repudiated that argument.
Additionally, Activision fought against the union petition, arguing that any union would need to include all of the studio’s employees, but the Labor Board rejected the claim and let the effort proceed.
According to multiple reports, Activision management continued to push against the union in the weeks leading up to the vote. Some Raven employees told The Washington Post company leaders had suggested at a town hall meeting that unionization could hurt game development and impact promotions and benefits. The following day, the managers allegedly sent an email urging workers to “vote no.”
On Monday, Labor Board prosecutors announced they had determined that Activision illegally threatened workers and enforced a social media policy that violated bargaining rights. Activision denied the new allegations.
The two parties will have until the end of the month to file an objection, and if none are filed, the union becomes official. It is currently unclear how Activision and Raven will respond, but they have signaled that they might not make the transition period easy for the union.
According to internal documents seen by Bloomberg, the company has repeatedly mentioned that it can take a while for a union to negotiate its first contract.
In a statement following the vote, an Activision spokesperson told The Post that the company respects the right of its employees to vote for or against a union, but added: “We believe that an important decision that will impact the entire Raven Software studio of roughly 350 people should not be made by 19 of Raven employees. We’re committed to doing what’s best for the studio and our employees.”
See what others are saying: (The New York Times) (The Washington Post) (Bloomberg)
Uber Forks Over $19 Million in Fine for Misleading Australian Riders
The penalty is just the latest in a string of lawsuits going back years.
Uber Gets Fined
Uber has agreed to pay a $19 million fine after being sued by the Australian Competition and Consumer Commission for making false or misleading statements in its app.
The first offense stems from a company policy that allows users to cancel their ride at no cost up to five minutes after the driver has accepted the trip. Despite the terms, between at least December 2017 and September 2021, over two million Australians who wanted to cancel their ride were nevertheless warned that they may be charged a small fee for doing so.
Uber said in a statement that almost all of those users decided to cancel their trips despite the warnings.
The cancellation message has since been changed to: “You won’t be charged a cancellation fee.”
The second offense, occurring between June 2018 and August 2020, involved the company showing customers in Sydney inflated estimates of taxi fares on the app.
The commission said that Uber did not ensure the algorithm used to calculate the prices was accurate, leading to actual fares almost always being higher than estimated ones.
The taxi fare feature was removed in August 2020.
A Troubled Legal History
Uber has been sued for misleading its users or unfairly charging customers in the past.
In 2016, the company paid California-based prosecutors up to $25 million for misleading riders about the safety of its service.
An investigation at the time found that at least 25 of Uber’s approved drivers had serious criminal convictions including identity theft, burglary, child sex offenses and even one murder charge, despite background checks.
In 2017, the company also settled a lawsuit by the Federal Trade Commission (FTC) for $20 million after it misled drivers about how much money they could earn.
In November 2021, the Justice Department sued the company for allegedly charging disabled customers a wait-time fee even though they needed more time to get in the car, then refused to refund them.
Later the same month, a class-action lawsuit in New York alleged that Uber charged riders a final price higher than the upfront price listed when they ordered the ride.