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Manufacturer Behind Kylie Cosmetics and KKW Beauty Sues to Keep Coty From Stealing Its Trade Secrets

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  • 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

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Department of Justice Files Antitrust Suit Against Google Alleging Unlawful Monopoly

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  • The Department of Justice is filing an antitrust lawsuit against Google, accusing it of illegally maintaining its monopoly by using its hefty ad revenue to engage in exclusionary contracts that block competition. 
  • An example of this would be Google’s arrangement with Apple to be the default browser on Safari. The Department thinks this agreement makes it impossible for competition to break through. 
  • Google has defended itself and says that it does make room for competition, but that consumers choose Google of their own volition. 
  • This is one of the largest antitrust suits against a major tech company in years and could be a long legal battle. Depending on the outcome, there could be major implications for other tech companies outside of Google. 

DOJ Files Suit Against Google

The Department of Justice announced Tuesday that it is filing an antitrust suit against Google, launching one of the largest cases of its kind against a tech company in decades. 

The suit will hurl multiple allegations against the tech giant, including claims that it maintains its monopoly via unlawful exclusionary and interlocking agreements and contracts that block the growth of competition. The Justice Department is claiming that the company spends billions of dollars in ad revenue to pay major phone and tech companies like Apple to make Google the default search engine on web browsers. 

The lawsuit also alleges that Google has arrangements to make sure its search application is preloaded and cannot be deleted on mobile Android devices, which the department says hurts and prevents competition. 

An action like this from the Justice Department has been highly anticipated for some time now. In the summer of 2019, Department officials announced a broad review of the practices of big companies, including Google. Their investigation into the company has lasted since and has included probes into several aspects of the Silicon Valley behemoth. 

“An antitrust response is necessary to benefit consumers,” Jeffrey A. Rosen, deputy Attorney General said in a briefing. “If the government does not enforce the antitrust laws to enable competition, we could lose the next wave of innovation. If that happens, Americans may never get to see the next Google.”

Google’s Dominance on the Internet 

The Attorneys General from eleven states will be joining the suit, and many more may decide to hop on as the legal battle continues. It could take years for this to play out and be resolved. Pending the results, it could also have major implications for other big tech companies. 

Google’s dominance across the internet is prominent. According to data from Vox, when it comes to searching, the company takes up 92% of the market, with its biggest competitor, Bing, owning just a small sliver of that space. When it comes to smartphone operating systems, it takes up 85% of the market. For web browsers, it takes up 66%. 

The Justice Department is not the only part of the government to recently take aim at Google. In the first week of October, a House subcommittee released a report accusing Google, as well as Facebook, Amazon and Apple, of holding and abusing monopoly power in their respective industries. That report mentioned anti-competitive contracts at Google. The House suggested that there was a “pressing need for legislative action and reform” when it comes to monopolies at major tech companies. 

Google’s Response

Google has repeatedly denied that it holds an unlawful monopoly. In a Tuesday statement, the company maintained that it allows for healthy competition and condemned the Justice Department’s choice to bring an antitrust suit forward.

“Today’s lawsuit by the Department of Justice is deeply flawed,” the statement said. “People use Google because they choose to, not because they’re forced to, or because they can’t find alternatives.”

This lawsuit would do nothing to help consumers. To the contrary, it would artificially prop up lower-quality search alternatives, raise phone prices, and make it harder for people to get the search services they want to use.”

When it came to specifics in the suit, Google claimed the Justice Department was relying on “dubious antitrust arguments.” The company compared the agreements it has with companies like Apple to a cereal brand paying a grocery store to stock its boxes at eye level.

When it comes to Apple specifically, Google claims that it is the default in Safari because Apple believes Google to be the best search engine. Google also said their agreement is not exclusive and that Bing and Yahoo are also featured in Safari.

“This isn’t the dial-up 1990s, when changing services was slow and difficult, and often required you to buy and install software with a CD-ROM,” Google argued. “Today, you can easily download your choice of apps or change your default settings in a matter of seconds—faster than you can walk to another aisle in the grocery store.”

“This lawsuit claims that Americans aren’t sophisticated enough to do this. But we know that’s not true.”

While it will take several years for this case to be resolved, many are analyzing what the potential outcomes may be. The Wall Street Journal said that if Google loses, there could be court-ordered changes to its practices, potentially to create openings for new rivals. However, the lawsuit will not immediately specify specific solutions. That step will come further down the road. 

If Google wins this, it could throw a wrench in the government’s growing plans to go after big tech companies. Other investigations could get complicated or foiled, and it could mean that this issue might have to move into Congress’ hands.  

See what others are saying: (Vox) (Wall Street Journal) (CNN)

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Thousands of Amazon Workers Demand Paid Time Off To Vote

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  • Around 4,000 Amazon tech workers signed a petition Tuesday that calls for eight hours of paid time off to be made available for employees to use up until Election Day for voting-related activities, including voting, registering, and volunteering.
  • Amazon, which is the second-largest employer in the U.S., does not currently have a companywide policy that offers its over 1.3 million workers paid time off to vote.
  • By contrast, companies like Walmart, Facebook, Apple, Uber, Starbucks, and dozens of others offer some sort of paid allotted time for voting.
  • Amazon says employees can request time off to vote, but the number of hours and pay it will provide depends on local laws.
  • Critics note that while some states require employees to be excused and paid for a few hours if voting conflicts with work schedules, several battleground states, including Florida and Pennsylvania, do not.

Employees Back Petition

Thousands of Amazon tech workers backed a petition Tuesday urging the company to offer employees paid time off to vote on or before Election Day.

Amazon is the second-largest employer in the country, with over 1.3 million U.S. workers, including Whole Foods employees. However, it does not have a companywide policy in place that offers paid time off to participate in federal elections.

For comparison, Walmart, which is the nation’s largest employer, offers up to three paid hours for its employees to vote. Other companies like Facebook, Apple, Uber, Twitter, and Starbucks also provide allotted time for voting. Some companies, like Patagonia, are even closing their doors completely on Election Day, while stores like Best Buy are reducing hours.

Supporters of such policies point out that for many Americans, voting, especially during a pandemic, can mean hours-long lines and other unexpected delays.

Because of this, on Tuesday, more than 4,000 Amazon tech workers added their support to a petition that was created internally that morning by Amazon Employees for Climate Justice.

That group formed in 2018 to put pressure on the company to commit to reducing fossil fuel emissions, but has expanded its focus to speak out against poor working conditions and other issues.

The petition calls for eight hours of paid time off to be made available for employees to use up until Election Day for voting-related activities, including registering to vote and volunteering.

Amazon Responds

However, on the other side of the issue, Amazon spokeswoman Jaci Anderson said that the company has given employees information on how to register to vote and request time off.

“In all 47 states with in-person voting, employees that lack adequate time before or after their scheduled workday to vote, can request and be provided excused time off,” she explained. “The number of hours and pay provided to employees varies by state in line with local laws.”

It appears that for now, Amazon doesn’t want to make paid time off for voting a company-wide policy and instead will only comply with local laws.

That’s a big deal because, although many states require employees to be excused and paid for a few hours if voting conflicts with work schedules, several battleground states, including Florida and Pennsylvania, do not.

See what others are saying: (NBC News) (CNN) (The New York Times)

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Facebook Bans Holocaust Denial, Reversing Previous Policy

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  • Facebook announced Monday that it was expanding its hate speech policy to ban content that denies or distorts the Holocaust, a significant reversal from Mark Zuckerberg, who previously said he would leave the content up because it was not “intentional.”
  • In a blog post, the company cited the rise of antisemitism and lack of knowledge about the Holocaust among young people as the reasoning behind their decision.
  • While many applauded the move, they also argued that Facebook could have done this years ago and that the company was only taking action now because of pressure campaigns like Stop Hate for Profit.
  • Others also noted that the company made similar changes this week like banning QAnon and anti-vax ads, and argued Facebook was only reversing these policies to get good press ahead of the election.

Facebook Reverses Holocaust Denial Policy

Facebook will now ban all content that denies or distorts the Holocaust, the company announced Monday, reversing a years-long policy promoted by CEO Mark Zuckerberg.

Zuckerberg has long argued that his platform should not be an “arbiter of truth” and intervene in questions of free speech. In 2018, he told Recode that while he found Holocaust denial “deeply offensive,” as a Jewish person himself, he did not think Facebook should regulate it.

“At the end of the day, I don’t believe that our platform should take that down because I think there are things that different people get wrong,” he said. “I don’t think that they’re intentionally getting it wrong.” 

Now, Zuckerberg seems to have backtracked entirely, and in a Facebook post on Monday, he said the company would be expanding its hate speech policy to include Holocaust denial.

“We’ve long taken down posts that praise hate crimes or mass murder, including the Holocaust,” he wrote. “But with rising anti-Semitism, we’re expanding our policy to prohibit any content that denies or distorts the Holocaust as well.”

“I’ve struggled with the tension between standing for free expression and the harm caused by minimizing or denying the horror of the Holocaust,” Zuckerberg continued.

“My own thinking has evolved as I’ve seen data showing an increase in anti-Semitic violence, as have our wider policies on hate speech.” 

Rise in Antisemitic Violence and Holocaust Ignorance

The claim that antisemitism and anti-Semitic violence is rising is one that has been backed up by numerous recent reports. In May, the Anti-Defamation League (ADL) reported that 2019 saw the highest level of antisemitic incidents since the organization first started tracking in 1979.

This general trend has been supported by other organizations, including the Federal Bureau of Investigation, which reported that in 2018 that the number of anti-Jewish hate crimes had increased by nearly 40% from 2014.

However, that rise also goes beyond the U.S., which is something Facebook noted in the official blogpost announcing the policy change. In addition to “the well-documented rise in anti-Semitism globally,” the platform also said its decision was supported by “the alarming level of ignorance about the Holocaust, especially among young people.”

The company specifically noted a recent study that found that almost one in four U.S. adults aged 18-39 “said they believed the Holocaust was a myth, that it had been exaggerated or they weren’t sure.”

The study, which went viral last month following its publication, also found generally shocking levels of ignorance that Gen Z and Millenial Americans had about the Holocaust.

Among other things, that study reported that nationally, 63% of respondents did not know 6 million Jews were murdered during the Holocaust, and one in every eight said they had not even heard about it before.

Perhaps most relevant to Facebook’s new policy, the study also found that nearly half of people said had seen Holocaust denial or distortion in posts on social media or elsewhere online. 

Facebook Accused of Fostering Antisemitism

As is the case with other forms of hate speech and conspiracies, Facebook has long been accused of letting antisemitism flourish by allowing Holocaust denial on the platform.

In July, the ADL published an extensive report on the issue titled “Facebook Has a Holocaust Denial Problem.” Among other things, that report found that both public and private Holocaust denial groups that the platform shared anti-Semitic content that violated Facebook’s existing and long-held community guidelines.

The same month that report was published, the ADL also launched the Stop Hate for Profit campaign, which involved an ad boycott of Facebook from over 1,000 major companies as well as a separate campaign where celebrities froze their Instagram and/or Facebook accounts for one day. 

While some said those efforts fell short, a number of people applauded Facebook’s Monday announcement and called the move a win for the campaign.

“Good news—another win for #StopHateForProfit: Facebook should have banned Holocaust denial long ago, but better late than never,” actor Sacha Baron Cohen, who has been a vocal critic of Facebook, tweeted.

Many others also hit on the point that this decision from Facebook was a good step, but it should have been done long ago. In a statement, ADL CEO Jonathan Greenblatt commended the move, but noted that the ADL had been encouraging the platform to take this step for almost 10 years.

Greenblatt also implied that despite how Facebook may have presented the decision in their remarks, the company was not taking the action out of goodwill for the Jewish community, but rather because of external pressure from Stop Hate for Profit and other campaigns.

“As Facebook finally decides to take a stance against Holocaust denial and distortion, they claim it is because of their work with the Jewish community over the past year,” he said. “We question this claim because if they had wanted to support the Jewish community, this change could have been implemented at any point in the last nine years.”

Questions Over Timing

Other’s also had similar questions about the timing of the decision, noting that in the last two weeks alone, Facebook has made some major reversals, including saying it will temporarily stop all political ads after the election and announcing it will ban QAnon. On Tuesday morning, the company also announced it will start banning anti-vax ads.

As a result, many argued that, despite years of pressure, Facebook is only choosing to crack down on these issues now to get good press and appear as though they are addressing deep-rooted issues ahead of Election Day.

While plenty of people have still said these new changes are better late than never, others claim they were too little too late, pointing out that Facebook had four years to address these issues, but waited until the election was already well underway.

Facebook has been criticized both for its oversized role in allowing the spread of misinformation on the platform in the lead-up to the 2016 election and for not doing enough to address those issues in preparation for the 2020 election.

Also on Monday, a new study published by the German Marshall Fund Digital reported that engagement with misleading websites on Facebook has more than tripled since the 2016 election, despite all the so-called achievements Facebook has touted in this area, and all the millions of dollars it poured into these efforts.

See what others are saying: (The New York Times) (TIME) (The Guardian)

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