Beauty Tech Startup Files Lawsuit Against Estee Lauder for Alleged Intellectual Property Theft
Estee Lauder is facing a lawsuit from a self-described “disruptive” startup, Nomi Beauty, which claims that the cosmetics giant has effectively driven it out of business by stealing its technology aimed at boosting sales from affluent travelers in hotels.
In a complaint filed on Friday night in Manhattan federal court, Nomi Beauty alleges that Estee Lauder has been “driving literally billions in new revenue” to itself after abandoning contracts in 2018 and 2020. These contracts were designed to help determine consumers’ actual preferences for cosmetics, rather than just their stated preferences.
Nomi, whose name is a homophone for “know me,” claims that its “secret sauce” was intended to assist Estee Lauder, the parent company of Clinique and MAC lipstick, in generating more revenue from luxury hotel duty-free shops and in-room purchases. This strategy aimed to reduce Estee Lauder’s reliance on traditional retail stores.
Instead of honoring its contracts or pursuing discussions to acquire Nomi outright, Estee Lauder allegedly starved Nomi’s hotel partners of products. Meanwhile, it rolled out competing programs in various countries, including China, Costa Rica, Malaysia, the United Kingdom, and the United States.
The complaint states that these programs “rely on the very same trade secrets Nomi had been educating Lauder about for years.” Nomi is seeking unspecified compensatory, punitive, and triple damages for the alleged infringement.
Estee Lauder has not yet responded to requests for comment regarding the lawsuit. Nomi’s lawyer, Matthew Schwartz, stated in an email, “Nomi’s stolen innovations brought Estee Lauder into the information age, and Estee Lauder continues to profit from them wildly.”
Both companies are headquartered in New York, and since February, Estee Lauder has been pursuing a “Beauty Reimagined” strategy. This initiative includes prestige product launches and a streamlining of its supply chain to address sliding sales. The strategy has also led to plans for up to 7,000 job cuts.
(Reporting by Jonathan Stempel in New York; Editing by Bill Berkrot)
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Estee Lauder is facing a lawsuit from a self-described “disruptive” startup, Nomi Beauty, which claims that the cosmetics giant has effectively driven it out of business by stealing its technology aimed at boosting sales from affluent travelers in hotels.
In a complaint filed on Friday night in Manhattan federal court, Nomi Beauty alleges that Estee Lauder has been “driving literally billions in new revenue” to itself after abandoning contracts in 2018 and 2020. These contracts were designed to help determine consumers’ actual preferences for cosmetics, rather than just their stated preferences.
Nomi, whose name is a homophone for “know me,” claims that its “secret sauce” was intended to assist Estee Lauder, the parent company of Clinique and MAC lipstick, in generating more revenue from luxury hotel duty-free shops and in-room purchases. This strategy aimed to reduce Estee Lauder’s reliance on traditional retail stores.
Instead of honoring its contracts or pursuing discussions to acquire Nomi outright, Estee Lauder allegedly starved Nomi’s hotel partners of products. Meanwhile, it rolled out competing programs in various countries, including China, Costa Rica, Malaysia, the United Kingdom, and the United States.
The complaint states that these programs “rely on the very same trade secrets Nomi had been educating Lauder about for years.” Nomi is seeking unspecified compensatory, punitive, and triple damages for the alleged infringement.
Estee Lauder has not yet responded to requests for comment regarding the lawsuit. Nomi’s lawyer, Matthew Schwartz, stated in an email, “Nomi’s stolen innovations brought Estee Lauder into the information age, and Estee Lauder continues to profit from them wildly.”
Both companies are headquartered in New York, and since February, Estee Lauder has been pursuing a “Beauty Reimagined” strategy. This initiative includes prestige product launches and a streamlining of its supply chain to address sliding sales. The strategy has also led to plans for up to 7,000 job cuts.
(Reporting by Jonathan Stempel in New York; Editing by Bill Berkrot)
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