Jury tells L’Oréal to pay $91m in trade secrets theft case

A Delaware jury has told beauty company L’Oréal to pay start-up Olaplex more than $91 million for stealing its trade secrets, infringing two patents and breaching a contract.

The jury, at the US District Court for the District of Delaware, handed down its decision yesterday, August 12.

L’Oréal was found liable for misappropriating trade secrets and infringing two patents that cover a system that protects hair during bleaching treatments.

Olaplex claimed that after its launch, L'Oréal attempted to hire away its key employees, which L'Oréal believed were responsible for Olaplex’s development.

In 2015, L'Oréal tried to acquire Opalex, according to the suit, and a confidentiality agreement was sent by L'Oréal to Opalex in order to “gain access” to information to acquire the company.

Opalex allegedly provided L'Oréal with a then unpublished patent application which described the use of maleic acid during hair bleaching, following which acquisition negotiations between the companies “fell apart”.

The claim added: “L'Oréal embarked on a scheme to create not one, but three, ‘me too’ knock-offs that it hoped would mimic Olaplex’s success.”

In April this year, the Delaware court granted Olaplex a preliminary injunction, finding that the startup had presented evidence showing “actual monetary harm and reputational harm”, whereas L’Oréal didn’t submit any evidence to counter this.

This was followed in June by District Judge Joseph Bataillon’s order of summary judgment on the patent issues involved in the case.

“The court has carefully reviewed the record, including the briefs of the parties and the relevant evidence as well as the legal standards appropriate to these issues. The court concludes that the motion for summary judgment filed by the plaintiffs must be granted,” said Bataillon.

The jury was tasked with deciding whether the patents were valid, whether L’Oréal had misappropriated Olaplex’s trade secrets and whether the beauty company had broken non-disclosure agreements.

Yesterday, the jury answered all of these questions in the affirmative.

Olaplex was awarded $22 million in damages for the agreement breach, $22 million for trade secret misappropriation, and nearly $47 million for patent infringement.