This summer, Olaplex landed a win – a $50 million win to be exact – when a jury found that cosmetics giant L’Oreal was on the hook for copying the products of haircare startup Olaplex. As a result of a favorable finding for Olaplex in August in the trade secret misappropriation, patent infringement, and breach of contract lawsuit that it filed in January 2017, L’Oreal USA would have to pay up, while also pulling nearly a dozen products – the ones that “slavishly” replicated Olaplex’s proprietary bonding system, a multi-step process aimed at strengthening and protecting hair – from shelves across the country.
In the latest win for nearly 6-year old Olaplex, a federal court in Delaware held that not only is L’Oreal not entitled to a new trial, it must pay up an extra $14.3 million (on top of the $50 million damages sum) to its younger rival to cover its legal bills. According to Reuters, in a decision on Monday, “U.S. District Judge Joseph Bataillon in Delaware said Olaplex had provided adequate documentation for the fee request and that the rates charged by its lawyers at Quinn Emanuel Urquhart & Sullivan were reasonable … and in no way excessive.”
The judge stated in his decision that the case was an “exceptional” one, and thus, met the standard required for the award of attorney’s fees (a district court has broad discretion in determining exceptionality, typically looking to factors, such as the substantive strength of the parties’ litigating positions and the manner in which the case was litigated), stating that L’Oreal’s conduct “border[ed] on, or [amounted to], vexatious litigation.”
As reported by Law360, Judge Bataillon called the case “one of the most overly-litigated cases this court has worked on during its tenure.” He held that, among other things, “the briefs and filings filed by [L’Oreal] were often excessive and duplicative,” and noted that “the court had to intervene far too often.”
Monday’s decision comes almost 3 years after Olaplex first filed suit against the U.S. arm of the Paris-based cosmetics titan for allegedly stealing valuable trade secrets from it during since-concluded acquisition talks that took place in 2015. Citing blatant theft and “corporate greed,” Santa Monica-based Olaplex told a Delaware federal court that less than a year after a May 2015 meeting between a representative for established industry stalwart L’Oreal USA and an officer for the then-barely-one-year-old Olaplex, L’Oreal introduced its own hair bonding system.
In doing so, Olaplex claimed that L’Oreal had “willfully copied [its] technology without authorization to create three slavish knockoff [products],” and in the process, not only ran afoul of the legally-binding confidentiality agreement it signed but also infringed two of Olaplex’s patents. L’Oreal’s actions, Olaplex argued, were part of a “willful and wanton” scheme to “deliberately … injure Olaplex’s business and improve its own.”
Following a week-long trial this summer, a jury agreed, determining that L’Oreal had, in fact, stolen trade secrets from Olaplex, and breached the confidentiality agreement it entered into on connection with that confidential information. As such, it found that the buzzy haircare company was entitled to nearly $100 million in damages, a sum that the court subsequently cut in half.
L’Oreal swiftly filed to appeal the decision, with a rep for the company telling that they “strongly disagree with [the] jury verdict, which applies only to the U.S. market,” and noting the company “continues to believe that Olaplex’s accusations are unfounded.” Counsel for the company had claimed during the trial that L’Oreal independently conceived of its version of the hair bonding products in August 2014, and argued that the allegedly confidential information upon Olaplex had based its case was already publicly-known information (and thus, not protected by trade secret law).
A rep for L’Oreal USA was not immediately available for comment.
*The case is Liqwd Inc. v. L’Oreal USA Inc., 1:17-cv-00014 (D. Del.).
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