David took on Goliath and David won, again. After a years-long legal battle, indie hair disruptor Olaplex has won a second judgement against beauty giant L’Oréal. Olaplex had accused the French giant of stealing trade secrets in a meeting in California in 2015, when the companies were conducting a due diligence process. L’Oréal said it independently conceived the use of a critical acid in August 2014 and developed its products on its own.
The brainchild of two PhDs in Chemistry and Materials, Olaplex went from being made in a California garage to the Holy Grail for professional colorists and consumers alike. The company still has less than 30 employees and does little traditional advertising. Conversely, L’Oréal’s hair-dyeing innovations go back more than a century and reported more than $30 billion in sales for last year. The product lines in question are just one part of a division with about $US3.7 billion in sales, or 12 per cent of L’Oréal’s 2018 revenue, according to data compiled by Bloomberg. But they are sold under the Matrix, Redken, and L’Oréal Professional labels, which are important to the overall brand’s identity.
On Monday, a jury ruled in Olaplex’s favor in all four claims—two patent claims, plus trade secret theft and breach of confidentiality—in a Delaware court, according to Olaplex lawyer Joe Paunovich of Quinn Emanuel. The jury also found that L’Oréal’s acts were intentional, leaving the door open for the judge to substantially increase the damages if he chooses.
The judge granted awards upward of $20 million on each of the four claims, but because of timing overlaps, Olaplex will get at least $37.4 million. Paunovich said that Olaplex plans to ask the court to triple that number—if the court agrees, L’Oréal could wind up paying Olaplex more than $112 million, plus fees.
Tiffany Walden, the Chief Administrative Officer and Chief Legal Officer at Olaplex, took to LinkedIn following the judgement and said, “A few weeks ago, I was told by opposing counsel that David defeated Goliath one time, but we shouldn’t hope to do it again and again. Today, we were vindicated when a jury in federal court in Delaware found a complete victory for Olaplex against L’Oréal USA for willful patent infringement and willful theft of trade secrets. This is Olaplex’s second trial victory in as many years against the largest beauty company in the world. I hope that our wins give confidence to any small start-up, that if you believe in your company, your technology, and are willing to stand up for what you know is right—one day justice will be served. No victory is done alone, so shout-out to the amazing team at Quinn Emanuel for their YEARS of hard work.”
A spokesman for L’Oréal issued a statement: “We are disappointed in and strongly disagree with today’s jury verdict in the Delaware Federal Court, which applies only to the U.S. market. We continue to believe that Olaplex’s accusations against us are unfounded, therefore [it] had no basis for a patent infringement claim against us nor did we misuse sensitive business information. We will appeal this verdict and expect to prevail on all counts. In addition to our appeal on the jury verdict, we have ongoing invalidation proceedings before the United States Patent and Trademark Office and the Federal Court of Appeals. We expect these future rulings to invalidate both patents at-issue in this case.”
This fight was also played out in UK courts. In November 2016, Olaplex filed a lawsuit against L’Oréal in the UK, claiming that the brand’s Smartbond Step 1 product infringes on the patent for Olaplex No. 1 Bond Multiplier. The UK court decided in their favor in June of 2018. L’Oréal also appealed that ruling.
“In 2015, seeing Olaplex’s tremendous success in the marketplace, L’Oréal sought to acquire the company with Olaplex sharing in good faith, confidential information,” said a statement released after the 2018 UK ruling by Olaplex. “L’Oréal ceased negotiation talks, and less than a year later launched products that have now been demonstrated in the U.K. High Court to infringe on Olaplex’s patented technology.”
“We are pleased that the judge found in our favor that claims 1 to 10 of the Olaplex patent, are invalid. However, we are disappointed to see that the judge upheld claim 11 of the patent. According to the judge’s findings, this specific claim is related to the use of the technology for the sole purpose of reducing damage during bleaching,” L’Oréal said in a statement provided to Allure. “We strongly disagree with this decision, which is applicable only in the U.K., and we will be applying for permission to appeal.”
Photo: via Olaplex