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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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Amazon Warehouse Workers in New York File Petition To Hold Unionization Vote

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A similar unionization effort among Amazon warehouse workers in Alabama failed earlier this year amid allegations that the company engaged in illegal union-busting tactics.


Staten Island Unionization Efforts Advance

Workers at a group of Amazon warehouses in Staten Island, New York, filed a petition with the National Labor Relations Board (NLRB) Monday to hold a unionization vote after collecting the necessary number of signatures.

The latest push is not affiliated with a national union but is instead organized by a grassroots worker group called the Amazon Labor Union, which is self-organized and financed via GoFundMe. 

The group is run by Chris Smalls, a former Amazon warehouse worker who led a walkout at the beginning of the pandemic to protest the lack of protective gear and other conditions. Smalls was later fired the same day.

For months now, Smalls and the other organizers have been forming a committee and collecting signatures from workers to back their push for a collective bargaining group, as well as pay raises, more paid time off, longer breaks, less mandatory overtime, and the ability to cancel shifts in dangerous weather conditions.

On Monday, the leader said he had collected over 2,000 signatures from the four Staten Island facilities, which employ roughly 7,000 people, meeting the NLRB requirement that organizers get support from at least 30% of the workers they wish to represent.

Amazon’s Anti-Union Efforts Continue

The campaign faces an uphill battle because Amazon  — the second-largest private employer in the U.S. — has fought hard against unionization efforts for decades and won.

This past spring, Amazon warehouse workers in Alabama held a vote for unionization that ultimately failed by a wide margin.

However, the NLRB is now considering whether to hold another vote after a top agency official found in August that Amazon’s anti-union tactics interfered with the election so much that the results should be scrapped and another one should be held.

Amazon, for its part, is already trying to undermine the new effort in Staten Island. As far back as the walkout led by Smalls at the beginning of the pandemic, workers have filed 10 labor complaints claiming that Amazon has interfered with their organizing efforts. 

The NLRB has said that its attorneys have found merit in at least three of those claims and are continuing to look into the others.

Meanwhile, Smalls told NPR last week that the company has ramped up those efforts recently by putting up anti-union signs around the warehouses and installing a barbed wire to limit the organizers’ space. 

Representatives for Amazon did not comment on those allegations, but in a statement Monday, a spokesperson attempted to cast doubt on the number of signatures Smalls and his group have collected.

“We’re skeptical that a sufficient number of legitimate employee signatures has been secured to warrant an election,” the spokesperson said. “If there is an election, we want the voice of our employees to be heard and look forward to it.”

The labor board disputed that claim in a statement from the agency’s press secretary on Monday, stressing that the group submitted enough signatures.

See what others are saying: (The New York Times) (NPR) (The Washington Post)

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Zuckerberg Says He’s “Retooling” Facebook To Attract Younger Adults

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The Facebook CEO made the remarks one day before the Senate expanded its questioning of how social media apps, in general, are protecting kids online.


Focus on Younger, Not Older

In an earnings call Monday, Facebook CEO Mark Zuckerberg assured investors that he’s “retooling” the company’s platforms to serve “young adults the North Star, rather than optimizing for the larger number of older people.”

Zuckerberg’s comments came the same day a consortium of 17 major news organizations published multiple articles detailing thousands of internal documents that were handed over to the Securities and Exchanges Commission earlier this year.

Several outlets, including Bloomberg and The Verge, reported that Facebook’s own research shows it is hemorrhaging growth with teen users, as well as stagnating with young adults — something that reportedly shocked investors. 

Amid his attempts to control the fallout, Zuckerberg said the company will specifically shift focus to appeal to users between 18 and 29. As part of that, he said the company is planning to ramp up Instagram’s Reels feature to more strongly compete with TikTok. 

He also defended Facebook amid the leaks, saying, “Good faith criticism helps us get better. But my view is that what we are seeing is a coordinated effort to selectively use leaked documents to paint a false picture of our company.”

But the information reaped from the leaked documents is nothing short of damning, touching on everything from human trafficking to the Jan. 6 insurrection, as well as Facebook’s inability to moderate hate speech and terrorism among non-English languages. 

Other Social Media Platforms Testify

On Tuesday, a Congressional subcommittee led by Sen. Richard Blumenthal (R-Ct.) directly addressed representatives from Snapchat, TikTok, and YouTube over child safety concerns on their platforms.

Facebook’s controversies have dominated social media news coverage since mid-September when The Wall Street Journal published six internal slide docs that showed Facebook researchers presenting data on the effect the company’s platforms have on minors’ mental health.

Now, Tuesday’s hearing marks a significant shift to grilling the whole of social media. Notably, this is also the first time Snap and TikTok have testified before Congress.

While each of the companies before senators generally said they support legislation to boost online protections for kids, they didn’t commit to supporting any specific proposals currently on the table. 

In fact, at one point, Sen. Ed Markey (D-Ma.) criticized a Snapchat executive after she said she wanted to “talk a bit more” before the company would support updates to his Children’s Online Privacy Protect Act, which was passed in 1998.

“Look, this is just what drives us crazy,” he said “‘We want to talk, we want to talk, we want to talk.’ This bill’s been out there for years and you still don’t have a view on it. Do you support it or not?”

See what others are saying: (Business Insider) (CNBC) (The Washington Post)

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Key Takeaways From the Explosive “Facebook Papers”

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Among the most startling revelations, The Washington Post reported that CEO Mark Zuckerberg personally agreed to silence dissident users in Vietnam after the country’s ruling Communist Party threatened to block access to Facebook.


“The Facebook Papers” 

A coalition of 17 major news organizations published a series of articles known as “The Facebook Papers” on Monday in what some are now calling Facebook’s biggest crisis ever. 

The papers are a collection of thousands of redacted internal documents that were originally turned over to the U.S. Securities and Exchanges Commission by former product manager Francis Haugen earlier this year. 

The outlets that published pieces Monday reportedly first obtained the documents at the beginning of October and spent weeks sifting through their contents. Below is a breakdown of many of their findings.

Facebook Is Hemorrhaging Teens 

Both Bloomberg and The Verge reported that Facebook is struggling to retain its hold over teens.  

For example, The Verge said the internal documents it reviewed showed that since 2019, teen users on Facebook’s app have fallen by 13%, with the company expecting another staggering falloff of 45% over the next two years. Meanwhile, the company reportedly expects its app usage among 20- to 30-year-olds to decline by 4% in the same timeframe.

Facebook also found that fewer teens are signing up for new accounts. Similarly, the age group is moving away from using Facebook Messenger.

In an internal presentation, Facebook data scientists directly told executives that the “aging up issue is real”  and warned that if the app’s average age continues to increase as it’s doing right now, it could disengage younger users “even more.”

“Most young adults perceive Facebook as a place for people in their 40s and 50s,” they explained. “Young adults perceive content as boring, misleading, and negative. They often have to get past irrelevant content to get to what matters.” 

The researcher added that users under 18 additionally seem to be migrating from the platform because of concerns related to privacy and its impact on their wellbeing.

Facebook Opted Not To Remove “Like” and “Share” Buttons

In its article, The New York Times cited documents that indicated Facebook wrestled with whether or not it should remove the “like” and “share” buttons.

The original argument behind getting rid of the buttons was multi-faceted. There was a belief that their removal could decrease the anxiety teens feel since social media pressures many to want to achieve a certain number of likes per post. There was also the hope that a decrease in this pressure could lead to teens posting more. Away from that, Facebook additionally needed to tackle growing concerns about the lightning-quick spread of misinformation.

Ultimately, its hypotheses failed. According to the documents reviewed by The Times, hiding the “like” button didn’t alleviate the social anxiety teens feel. It also didn’t lead them to post more. 

In fact, it actually led to users engaging with posts and ads less, and as a result, Facebook decided to keep the buttons. 

Despite that, in 2019, researchers for Facebook still asserted that the platform’s “core product mechanics” were allowing misinformation and hate to flourish.

“The mechanics of our platform are not neutral,” they said in the internal documents.

Facebook Isn’t Really Regulating International Hate

The Atlantic, WIRED, and The Associated Press all reported that terrorist content and hate speech continue to spread with ease on Facebook.

That’s largely because Facebook does not employ a significant number of moderators who speak the languages of many countries where the platform is popular. As a result, its current moderators are widely unable to understand cultural contexts. 

Theoretically, Facebook could solidify an AI-driven solution to catching harmful content spreading among different languages, but it still hasn’t been able to perfect that technology. 

“The root problem is that the platform was never built with the intention it would one day mediate the political speech of everyone in the world,” Eliza Campbell, director of the Middle East Institute’s Cyber Program, told the AP. “But for the amount of political importance and resources that Facebook has, moderation is a bafflingly under-resourced project.”

According to The Atlantic, as little as 6% of Arabic-language hate content on Instagram was detected by Facebook’s systems as recently as late last year. Another document detailed by the outlet found that “of material posted in Afghanistan that was classified as hate speech within a 30-day range, only 0.23 percent was taken down automatically by Facebook’s tools.”

According to The Atlantic, “employees blamed company leadership for insufficient investment” in both instances.

Facebook Was Lackluster on Human Trafficking Crackdowns Until Revenue Threats

In another major revelation, The Atlantic reported that these documents appear to confirm that the company only took strong action against human trafficking after Apple threatened to pull Facebook and Instagram from its App Store. 

Initially, the outlet said employees participated in a concerted and successful effort to identify and remove sex trafficking-related content; however, the company did not disable or take down associated profiles. 

Because of that, the BBC in 2019 later uncovered a broad network of human traffickers operating an active ring on the platform. In response, Facebook took some additional action, but according to the internal documents, “domestic servitude content remained on the platform.”

Later in 2019, Apple finally issued its threat. After reviewing the documents, The Atlantic said that threat alone — and not any new information — is what finally motivated Facebook to “[kick it] into high gear.” 

“Was this issue known to Facebook before BBC enquiry and Apple escalation? Yes,” one internal message reportedly reads. 

Zuckerberg Personally Made Vietnam Decision

According to The Washington Post, CEO Mark Zuckerberg personally called a decision last year to have Facebook agree to demands set forth by Vietnam’s ruling Communist Party.

The party had previously threatened to disconnect Facebook in the country if it didn’t silence anti-government posts.

“In America, the tech CEO is a champion of free speech, reluctant to remove even malicious and misleading content from the platform,” the article’s authors wrote. “But in Vietnam, upholding the free speech rights of people who question government leaders could have come with a significant cost in a country where the social network earns more than $1 billion in annual revenue.” 

“Zuckerberg’s role in the Vietnam decision, which has not been previously reported, exemplifies his relentless determination to ensure Facebook’s dominance, sometimes at the expense of his stated values,” they added.

In the coming days and weeks, there will likely be more questions regarding Zuckerberg’s role in the decision, as well as inquiries into whether the SEC will take action against him directly. 

Still, Facebook has already started defending its reasoning for making the decision. It told The Post that the choice to censor was justified “to ensure our services remain available for millions of people who rely on them every day.”

In the U.S., Zuckerberg has repeatedly claimed to champion free speech while testifying before lawmakers.

Other Revelations

Among other findings, the Financial Times reported that Facebook employees urged management not to exempt notable figures such as politicians and celebrities from moderation rules. 

Meanwhile, reports from Politico, CNN, NBC, and a host of other outlets cover documents related to Facebook’s market dominance, how much it downplayed its role in the insurrection, and more.  

Outside of these documents, similar to Haugen, another whistleblower submitted an affidavit to the SEC on Friday alleging that Facebook allows hate to go unchecked.

As the documents leaked, Haugen spent Monday testifying before a committee of British Parliament.

See what others are saying: (Business Insider) (Axios) (Protocol)

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