On Monday, August 12, a Delaware federal jury found that L’Oreal USA Inc. misappropriated Olaplex LLC’s trade secrets, breached a nondisclosure agreement, and willfully infringed on two of Olaplex’s patents related to a hair-coloring product. The patents in question related to a three-step system that protects hair from damage during bleaching.
The jury deliberated for only half a day, granting Olaplex approximately $22.3 million in damages for L’Oreal’s willful infringement of its trade secrets, another $22.3 million for breach of contract, and $47 million for infringements of Olaplex’s patents. The court still has to verify the actual damages amount and ensure that damages are not duplicative. Olaplex estimates that it will likely receive closer to $37.4 million in damages, but the court may also decide to multiply the award because the patent infringement and misappropriation were willful in nature.
The circumstances giving rise to the suit date back to discussions between the two companies over L’Oreal’s potential purchase of Olaplex. L’Oreal decided not to pursue the acquisition. Olaplex argued at trial that L’Oreal learned of its trade secrets during these discussions and opted to steal the secrets rather than pay millions of dollars to purchase the company. In response, L’Oreal asserted that: 1) the alleged secrets were public knowledge, and 2) that it had independently developed its own version of the hair-coloring products Olaplex claims it stole.
This verdict is not likely to end the dispute between L’Oreal and Olaplex. L’Oreal plans to appeal, and Olaplex has another suit pending against L’Oreal. In July, Olaplex asked a Los Angeles federal court to reassign a L’Oreal patent that embraces Olaplex’s misappropriated secrets.