20VECV00721
Assigned for all purposes to: Van Nuys Courthouse East, Judicial Officer: Shirley Watkins
Electronically FILED by Superior Court of California, County of Los Angeles on 06/30/2020 08:14 AM Sherri R. Carter, Executive Officer/Clerk of Court, by A. Salcedo,Deputy Clerk

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Neel Chatterjee (SBN 173985)
NChatte,jee@goodwinlaw.com
GOODWIN PROCTER LLP
601 Marshall Street
Redwood City, California 94063
Tel.:+ 1 650 752 3100
Fax: + 1 650 853 1038
Jennifer Briggs Fisher (SBN 241321)
JFisher@goodwinlaw.com
Nicholas M. Costanza (SBN 306749)
NCostanza@goodwinlaw.com
Megan D. Bettles (SBN 328161)
MBettles@goodwinlaw.com
GOODWIN PROCTER LLP
Three Embarcadero Center
San Francisco, California 94111
Tel.:+ 1 415.733.6000
Fax. : + 1 415.677.9041

REDACTED
Public-Redacts materials from
conditionally sealed record.

Amanda H. Russo (SBN 319617)
ARusso@goodwinlaw.com
GOODWIN PROCTER LLP
601 S. Figueroa St. , 41st Floor
Los Angeles, California 9001 7
Tel.: + 1 213 .426.2500
Fax. : +1 213.623.1673
Attorneys for Plaintiff
SEED BEAUTY, LLC and
BETA BEAUTY, LLC

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SUPERIOR COURT OF THE STATE OF CALIFORNIA

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COUNTY OF LOS ANGELES

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VAN NUYS COURTHOUSE EAST

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SEED BEAUTY, LLC, and BETA BEAUTY,
LLC

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Case No. - - - - - - - VERIFIED COMPLAINT FOR:

Plaintiff,

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(1) VIOLATIONS OF CALIFORNIA
UNIFORM TRADE SECRET ACT
§ 3426 ET SEQ. ;
(2) BREACH OF CONTRACT;
(3) INTENTIONAL INTERFERENCE WITH
CONTRACTUAL RELATIONS ; AND
(4) INJUNCTIVE RELIEF

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DEMAND FOR JURY TRIAL

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V.

COTY, INC. ; HFC PRESTIGE PRODUCTS,
INC. ; KING KYLIE, LLC; and DOES 1-25,

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Defendants.

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COMPLAINT

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Plaintiffs Seed Beauty, LLC ("Seed Beauty") and BETA Beauty, LLC ("BETA Beauty"

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and collectively with Seed Beauty as "Seed" or "Plaintiffs") hereby complain and allege against

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Defendants Coty, Inc. , HFC Prestige Products, Inc. (together with Coty, Inc. "Coty"), and King

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Kylie, LLC ("King Kylie") (collectively with Coty as "Defendants") (together with Seed as the

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"Parties") as follows:

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SUMMARY OF THE CASE

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1.

This action is to stop Coty's theft of Seed's pioneering and proprietary digital-first

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business model that has revolutionized the cosmetics industry. Seed's unique business model

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enables it to rapidly develop, manufacture, and promote new cosmetics through ecommerce and

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social media platforms. Seed does this by maintaining, "total control of its manufacturing

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process, working on everything from product development to marketing, all under one

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roof." 1 Seed is credited as the "beauty brand incubator" that is "responsible for much of'

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Defendant King Kylie's and KKW Beauty, LLC's ("KKW") success. 2 In fact, Seed Beauty

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formulates , makes, packages, and ships all of King Kylie's products. 3 Other media reports have

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commented that Seed's quiet role in building these brands is the "secret sauce" behind these

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brands. Seed's tight control of these secret processes drives its ability to quickly release exciting

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and groundbreaking new products in the digital cosmetics world.

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2.

Defendant Coty is a legacy beauty conglomerate failing in the marketplace. It has

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demonstrated over and over that it is unable to compete through its own innovation. Coty has

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seen five CEOs and dramatic stock price decline over the past five years and has admitted having

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extraordinary difficulty reinventing itself to successfully compete in the new digital cosmetics

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world.

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3.

Because it cannot win lawfully, Coty chose an unlawful path. It decided to steal

the secret sauce behind Seed. It sought deals with King Kylie and KKW in violation of the close

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InStyle, "The Secret Company Behind KKW Beauty and Kylie Cosmetics," available at
https://www.instyle.com/news/secret-company-behind-kkw-beauty-and-kylie-cosmetics.
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See id.
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Forbes, "How 20-Year-Old Kylie Jenner Built A $900 Million Fortune In Less Than 3 Years,"
available at https://www.forbes.com/sites/forbesdigitalcovers/2018/07 /11/how-20-year-old-kyliej enner-built-a-900-million-fortune-in-less-than-3-years/# 1b8e2b8aa62c.

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COMPLAINT

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partnership with Seed. First, Coty made a $600 million investment in King Kylie, but it really

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was a subterfuge to learn Seed's confidential business methodologies.

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Out of deep respect for Kylie Jenner, Kim Kardashian, and the highly successful

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businesses Seed created with them, Seed attempted to resolve this dispute privately and

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repeatedly asked for assurances related to leakage of Seed proprietary information from King

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Kylie to Coty. Coty and King Kylie consistently refused to provide any assurances. When Seed

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got wind of a potential KKW transaction, it successfully sought and obtained an injunction

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against KKW and those in active concert with KKW. Undeterred, Coty announced the deal

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anyway, creating even more threat to Seed's trade secret rights. Coty has chosen to ignore the

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Court order restricting the information it stole, and now it must be held accountable for its

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unlawful actions.

THE PARTIES

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5.

Plaintiff Seed Beauty, LLC, is a California limited liability company, with its

principal place of business in Oxnard, California.
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Plaintiff BETA Beauty, LLC is a California limited liability company, with its

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principal place of business in Oxnard, California. BETA Beauty, LLC is a wholly-owned

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subsidiary of Seed Beauty.

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7.

Upon information and belief, Defendant Coty, Inc. , is a Delaware corporation,

with its principal place of business in New York, New York.
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Upon information and belief, Defendant HFC Prestige Products, Inc. , is a

Connecticut corporation, with its principal place of business in New York, New York.
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Upon information and belief, Defendant King Kylie, LLC, is a Delaware limited

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liability company, with its principal place of business in Woodland Hills, California. Upon

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information and belief, Coty and Kylie Jenner, who is a citizen of the State of California, are the

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only members of King Kylie.

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10.

The true names and capacities of the Defendants named herein as DOES 1 through

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25 , inclusive, are unknown to Seed at this time. Seed sues these Defendants by such fictitious

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names. Seed will amend this Complaint to allege the true names and capacities of the fictitiously

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COMPLAINT

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named Defendants when Seed ascertains the identity of such Defendants. Seed is informed and

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believes, and thereon alleges, that each and every one of these Defendants is responsible in some

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manner for the threatened misappropriation of Seed' s trade secrets which will damage and

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irreparably harm Seed, and that Seed's inevitable injury, as alleged herein, will be proximately

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caused by their threated misappropriation.

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JURISDICTION AND VENUE

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This Court has subject matter jurisdiction over this action under Article VI,

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Section 10 of the California Constitution, exercisable under Section 410 .10 of the California Code

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of Civil Procedure. This Court has jurisdiction over these claims as the relief sought may

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properly be received from this Court.
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This Court has personal jurisdiction over Defendants Coty and King Kylie because

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they conduct business in California, including the formation or negotiation of contracts with

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parties domiciled in California.

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Venue is also proper in this Court pursuant to California Code of Civil Procedure

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Venue is also appropriate in this Court pursuant to

§ 395.

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, as all claims herein relate to either claims

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t misappropriation or violations

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. Both of those

read as follows :

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II

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II

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II

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COMPLAINT

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FACTUAL ALLEGATIONS
A. Seed Beauty And Its Exclusive Relationships

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Seed Beauty is a leading brand-incubator, developer, manufacturer, distributor,

and seller of beauty and cosmetics products.

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Seed Beauty has a unique business model which allows it to incubate new brands

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and products and swiftly bring them to market. For example, Seed Beauty's unique business

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model enabled it to create, develop, manufacture, store, sell, and distribute products for multiple

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direct-to-consumer brands all under one roof and bring products to market in record speed based

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entirely on consumer demand and through its e-commerce strategy. This business model,

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combined with the affordable, safe, and high-quality nature of Seed Beauty' s products, has

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skyrocketed young start-up brands to beauty and cosmetics sensations over a period of only a few

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years.

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One of Seed Beauty' s most unique competencies is its vertical integration

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capabilities. Seed Beauty employs hundreds of workers in Oxnard, California. These workers

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manufacture and ship products direct to consumers. As one of the last beauty manufacturers left

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in the United States, investing and protecting jobs in America, and especially in California, has

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always been important to Seed Beauty.

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Fallowing the rapid and extraordinary success of its many brands, several different

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celebrities expressed interest in partnering with Seed Beauty to create and/or develop beauty and

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cosmetics brands using Seed Beauty's unique business model. To date, Seed Beauty has

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incubated and grown numerous cosmetic lines. Seed Beauty' s wildly successful brands include:

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Kylie Cosmetics, KKW Beauty, and Tati Beauty.

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B. Seed's

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19.

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On or around June 9, 2016, Seed Beauty entered into an

arrangement with King Kylie, LLC,

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COMPLAINT

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and King Kylie's

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partnership with Seed Beauty, Kylie Cosmetics disrupted the market and became one of the

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fastest growing beauty brands in the world. Kylie Cosmetics currently has over 800+ different

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product SKUs developed and owned by Seed Beauty. This business deal helped King Kylie

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enormously as media reports have in the past valued the company at over $1 billion in 2019.

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Nearly one year after Seed Beauty began working on the Kylie Cosmetics brand,

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Kylie Jenner's older sister, Kim Kardashian, approached Seed Beauty to do the same with her

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beauty and cosmetics brand, which was operated through KKW.

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COMPLAINT

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C. Seed's Trade Secrets Arising from Seed's Relationships with King Kylie and KKW

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Seed Beauty's business model, and the contracts related to its various product

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lines, are maintained as trade secrets by Seed Beauty. Most importantly, the exclusive deals

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between Seed Beauty and its partners are carefully maintained as trade secrets and are not shared

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with competitors. The structure of those partnerships, as well as the economic terms, are key

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differentiators under Seed Beauty' s business model and are important to Seed Beauty' s success.

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In fact, Seed Beauty's success depends in part on the protection of its trade secrets and other

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confidential information.

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30.

Because Seed Beauty's business includes full scale, one-stop-shop creative and

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logistical development services for young and/or start-up beauty brands, the details of Seed

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Beauty's relationships with its beauty brand partners necessarily includes the exchange of highly

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sensitive, confidential and trade secret information regarding these relationships (including key

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negotiated deal terms) as well as the operation of Seed Beauty and its business model.

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Indeed, necessary to both

was the exchange of such confidential

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and trade secret information, including, but not limited to, non-public proprietary and confidential

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information pertaining to : (1)

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COMPLAINT

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(collectively, the "Seed Beauty Trade

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Secrets").
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Such confidential Trade Secrets are highly valuable to Seed Beauty in the course

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of conducting their business, because Seed Beauty derives economic value from the information

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not being made public, and any competitor who acquired such information would be given an

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unfair competitive advantage.

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Specifically, the Seed Beauty Trade Secrets to which King Kylie and KKW had

access are essential to Seed Beauty's competitive position in the beauty and cosmetics industry.
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The Seed Beauty Trade Secrets are not generally known in the beauty industry and

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could not be learned by others, if at all, without considerable expenditure of time, effort, or

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expenses. And Seed Beauty ensures that its exclusive beauty brand and cosmetic partners are

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subject to strict confidentiality and non-disclosure obligations.

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COMPLAINT

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In addition to requiring confidentiality in its agreements, Seed Beauty goes to great

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lengths and has taken reasonable measures to ensure that its confidential, proprietary, and trade

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secret information, including the Seed Beauty Trade Secrets, remain secret and confidential,

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including specifically prohibiting and preventing disclosure to the public and/or Seed Beauty's

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competitors who could, if privy to the Seed Beauty Trade Secrets, use this information to harm

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Seed Beauty's existing relationships, unfairly compete against Seed Beauty for other exclusive

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relationships in the beauty and cosmetics industry, and/or engage in any other anti-competitive

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behavior.

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Such efforts by Seed Beauty to maintain the confidentiality of the Seed Beauty

Trade Secrets, include, but are not limited to: (1) restricting access to the Seed Beauty Trade

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COMPLAINT

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Secrets, including at least by employing numerous mechanisms for securing its office, including

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key card access at the office entrance, additional key card and code access, with further

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restrictions, at the laboratory and development sites, and monitoring of the entire premises by

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security personnel employed by the office complex, (2) ensuring that Seed Beauty's computer

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network and systems are secure, including requiring passwords and other security verifications

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for computer access where the Seed Beauty Trade Secrets may be stored, and limiting access to

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electronic resources only to those employees who need to access them within the scope of their

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access the Trade Secrets,

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Additionally, all Seed employees must sign non-disclosure agreements to ensure information,

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including, but not limited to, the Seed Beauty Trade Secrets, is kept private and confidential.
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Seed Beauty's competitive position would be gravely harmed if one of its

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competitors were to gain access to the Seed Beauty Trade Secrets, as this would allow the

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competing company to exploit many years' worth of highly valuable knowledge and knowhow

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developed by Seed Beauty.

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D. Coty and Its Acquisition of King Kylie

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According to public filings, Coty considers itself to be one of the world's largest

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beauty companies, which includes a "Consumer Beauty" segment "focused on color cosmetics,
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retail hair coloring and styling products, body care and mass fragrances." 4

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Form 10-K, Coty Inc. , 2019 ("2019 Form 10-K"), available at
https://sec.report/Document/0001024305-19-000097 /.

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42.

Coty's "Consumer Beauty division primarily sells products through hypermarkets,

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supermarkets, drug stores and pharmacies, mid-tier department stores, traditional food and drug

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retailers, and dedicated e-commerce retailers." 5

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According to Coty, it is "continuously innovating to increase our sales by elevating

our digital presence, including e-commerce and digital, social media and influencer marketing. " 6

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In identifying the risks in connection with its business, Coty has stated that "[t]he

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beauty industry is highly competitive" and that "[t]he color cosmetics category has been

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influenced by entry by new competitors and smaller competitors that are fast to respond to trends

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and engage with their customers through digital platforms ... " 7

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Since Coty's 2016 acquisition of Procter & Gamble's beauty brands, like Clairol

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and CoverGirl, Coty has indicated that it has faced continued difficulties in trying to integrate and

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tum around these legacy brands. As Coty's former Chief Executive Officer & Director, Pierre

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Laubies, admitted in a July 1, 2019 investor call, "it is very true that the P&G Beauty merger has

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led to value suppression and financial setbacks for Coty." 8

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In particular, Coty's business has been under considerable distress due to the

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growth of digital platform business. In the last five years, Coty's stock price has fallen

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approximately 87%. On information and belief, Coty's falling stock price is at least in part

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attributable to its inability to evolve with the changing market. Peter Harf, Coty's CEO, has

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recently commented "in the last 5 years, we had 5 CEOs. I mean that shows that we lost our

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way." 9

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In fact, Coty expressly acknowledged that "[c]onsumer shopping preferences have

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also shifted, and may continue to shift in the future, to distribution channels other than traditional

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retail in which we have more limited experience, presence and development, such as direct sales

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s Id.
Id.
7 Id.
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Coty, Inc, July 1, 2019 Business Update Call Transcript, available at
https://s23.q4cdn.com/980953510/files/doc events/20190701 COTY MA Call DN0000000026
63079007 .pdf.
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Coty, Inc, June 1, 2020 Business Update Call Transcript ("June 1, 2020 Business Call"),
available at https://s23 .g4cdn.com/980953510/files/doc events/2020/06/Business-Update-CallTranscript.pdf.

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COMPLAINT

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and e-commerce. If we are not successful in our efforts to expand distribution channels, including

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growing our e-commerce activities, we will not be able to compete effectively." 10 Mr. Harf

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commented in a June 1, 2020 call to analysts that "[w ]e are in the process of creating a digital

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platform, both social media and e-commerce across the brand portfolio of Coty. As you know, e-

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commerce at the moment is going to rule." 11

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48.

Seed is a company, who, through its exclusive partnerships and confidential, trade

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secrets, has managed to successfully compete in the color cosmetics industry through its unique

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direct-to-consumer and e-commerce business model. It is this business model Coty seeks to

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replicate. It would be one thing if Coty wanted to reinvent itself and compete fairly. But Coty

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crossed the legal line when it decided to rebuild itself by stealing every aspect of Seed's

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pioneering business model.

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In or around June 2019, media reports suggested that Coty was interested in

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acquiring the Kylie Cosmetics brand through purchasing an equity interest in King Kylie. At or

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around this time, John Nelson, Seed Beauty's co-founder and CEO, notified King Kylie that it

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was prohibited from

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main competitor to Seed Beauty. King Kylie refused to confirm or deny whether it had

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to Coty, a

to Coty.

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On or around November 18, 2019, Coty publicly announced its intent to acquire

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King Kylie in a strategic partnership with the company, which it claimed would, among other

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things, "expand [Coty's] presence in both premium cosmetics and skincare." 12

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The public announcement and public information about the acquisition discussed

the transaction as follows:

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a. "Coty is going to buy a 51 % stake in Kylie beauty business for $600 million in
cash·" 13
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2019 Form 10-K.
June 1, 2020 Business Call.
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See Bloomberg Transcript, Acquisition of King Kylie, by Coty Inc. , Presentation, Nov. 18,
2019, available at https://s23.q4cdn.com/980953510/files/doc events/2019/ 11/Kylie-TranscriptFINAL.pdf.
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See public transcript for "Coty Inc and Kylie Jenner Announce Strategic Partnership to Expand
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COMPLAINT

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b. " ... Coty and King Kylie will enter into an Evergreen Collaboration Agreement,

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pursuant to which, in exchange for a marketing fee and a license fee, Coty will

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receive the right and license to manufacture, advertise, promote, distribute and sell

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certain products of King Kylie and use certain intellectual property owned by or

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licensed to King Kylie in connection with the development, manufacture, labeling,

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packaging, advertising, display, distribution and sale of such products. The

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agreement will continue in perpetuity, with limited exceptions;" 14

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c. "On one side, Kylie brings her incredibly strong brand equity as both a person and

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as a brand, with unparalleled social media reach among Generation Z

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customers .. . On the other side, we, as Coty, bring very extensive R&D,

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manufacturing and distribution capabilities as well as our expertise in core beauty

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categories across cosmetics, skin care and fragrances ;" 15

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d. " ... Kylie beauty will expand our presence in both premium cosmetics and
skincare . . . ,·" 16

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e. "The partnership with Coty .. .will allow Kylie Beauty to capitalize on these

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international expansion opportunities. Given our global R&D, manufacturing and

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distribution footprint, and you see that on the map, we are very well positioned to

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further build out this growing brand;" 17

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f.

" ... the fact that the network of Coty is going to help providing more economic

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conditions in engineering, manufacturing and distributing the products;" 18 and

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g. "Coty will have overall responsibility for the portfolio 's development, leveraging

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Beauty Brands Globally - M&A Call," released November 18, 2019 ("November 18 M&A Call
Transcript"); Form 8-K, Coty Inc. , Nov. 18, 2019,
https://www.sec.gov/ Archives/edgar/data/ 1024305/000119312519294319/d83 7125d8k.htm
("Nov. 18, 2019 Form 8-K"); see Coty Press Release, Coty and Kylie Jenner Announce Strategic
Partnership to Expand Beauty Brands Globally, Nov. 18, 2019, available at
https://www.Coty.com/in-the-news/press-release/Coty-and-kylie-jenner-announce-strategicBartnership-expand-beauty-brands.
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Nov. 18, 2019 Form 8-K.
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Nov. 18 2019 M&A Call Transcript.
16 Id.
11 Id.
1s Id.

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COMPLAINT

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its global knowledge and capabilities in R&D, manufacturing, distribution,

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commercial and go-to market expertise, as well as its deep understanding of the

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fragrances, cosmetics and skincare categories. In addition to its responsibilities

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within the partnership, Coty will act as a licensee for skincare, fragrances, and nail

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products." 19

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Shortly after this announcement, on or around November 25 , 2019, Seed caught

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wind of the transaction, and sent letter correspondence to both King Kylie and Coty, expressing

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its deep concerns with the transaction given Seed's

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King Kylie .

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rrangement with

One of Seed's primary concerns related to the sharing or disclosure of its highly

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confidential and proprietary trade secrets that were necessarily disclosed within the context of the

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Seed-King Kylie relationship. In its communications with King Kylie and Coty, Seed clearly

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indicated that the details of the business arrangement between Seed and King Kylie

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. As

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d asked King Kylie to confirm that t

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In response, King Kylie still refused to confirm or deny whether it had already

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disclosed the Seed Beauty Trade Secrets or any confidential details to Coty. King Kylie simply

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stated that Seed's concerns were unfounded and unwarranted, and Coty took no position on the

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matter. Neither party confirmed that such information had not been disclosed.

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Throughout the month to follow, Seed continued to seek assurances from King

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Kylie and Coty that King Kylie did not disclose the Seed Beauty Trade Secrets or any

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confidential details of the

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unclear whether confidential details of Seed's and King Kylie's relationship were or had been

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fully disclosed to Coty by King Kylie. Seed Beauty requested that Coty not close the transaction

, but to no avail. As such, it remained

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Nov. 18, 2019 Form 8-K, Exhibit 99.1, available at
https://www.sec.gov/Archives/edgar/data/1024305/000119312519294319/d83 7125dex991 .htm.

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until this issue was resolved. Ignoring Seed's request, Coty and King Kylie closed the deal

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anyway.

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Despite Seed's numerous attempts to resolve the associated issues with the

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transaction with King Kylie and Coty, it was nonetheless announced that the transaction had

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closed on January 6, 2020. See https://www.Coty.com/in-the-news/press-release/Coty-and-kylie-

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jenner-commence-strategic-partnership. As a result, HFC Prestige Products, Inc., a wholly

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owned subsidiary of Coty, acquired 51 % of the equity interests in King Kylie for a reported $600

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million. 20

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Following this announcement, John Nelson again notified King Kylie that it

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remained

and King Kylie neither

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confirmed nor denied whether it had already disclosed the Seed Beauty Trade Secrets to Coty.

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Shortly thereafter, Coty announced it was appointing a Coty-selected CEO for King Kylie. At

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this point in time, King Kylie announced that had appointed Cristoph Honnefelder as the CEO of

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King Kylie . Mr. Honnefelder did not work for Coty prior to joining King Kylie and was hired as

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an outsider. Mr. Honnefelder joined King Kylie on or about January 21 , 2020. At this point in

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time, Seed Beauty had not received any confirmation as to what information had been shared with

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Coty despite its repeated requests. Seed has recently learned that Mr. Honnefelder is no longer

18

the CEO of King Kylie and, on information and belief, Coty is now controlling the company and

19

Mr. Harf s team is overseeing the operations of King Kylie.

E. Coty's Anticipated Acquisition of KKW and Seed's Lawsuit Against KKW Beauty

20
21

58 .

On or around June 3, 2020, just months after closing the deal with King Kylie,

22

various media outlets reported that Coty is currently pursuing a collaboration with KKW Beauty

23

regarding certain beauty products following statements by Coty in a public filing . See, e.g. ,

24

https://www.bloomberg.com/news/articles/2020-06-03/Coty-in-talks-with-kim-kardashian-after-

25

kylie-jenner-deal. On information and belief, the "collaboration" reported in the press is actually

26

a majority-stake investment in KKW. Seed Beauty is also informed and believes that, in

27

°

2

28

Form 8-K, Coty Inc., January 6, 2019, available at https://sec.report/Document/000119312520-002203/.

GOODWIN PROCTER LLP
A TIORNEYS AT LAW
SIUCDN VALLEY

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COMPLAINT

 1

connection with this anticipated transaction, representatives of Coty have requested certain

2

disclosures from KKW, including, but not limited to, requests for copies of material commercial

3

agreements and other categories of information that would include Seed Beauty Trade Secrets

4
5
6
7

59.

represented King Kylie in connection with its transaction with Coty.

8
9

On information and belief, KKW is represented by the same counsel that

60.

Because of the previous failures to provide a clear answer related to the disclosure

ofthe

and because of the imminent discussions between KKW and

10

Coty, Seed Beauty became gravely concerned that KKW would disclose Seed Beauty Trade

11

Secrets to Coty unless KKW was enjoined from doing so by this Court.

12

61.

Accordingly, Seed filed a related action against KKW in this Court on June 19,

13

2020 to prevent KKW's disclosure of the

14

contractual and trade secret ownership rights (the "Seed-KKW Action").

15

62 .

, and to preserve Seed's other

In the same action, Seed filed an ex parte application for a temporary restraining

16

order on June 22, 2020 ("Seed-KKW TRO"), seeking to enjoin KKW and all those acting in

17

concert with it from directly or indirectly disclosing, misappropriating, or facilitating the

18

disclosure or misappropriation of, or sharing in any way any details related to the Seed-KKW

19

Beauty business relationship or arrangement with Coty.

20

63 .

Shortly after the filing of Seed-KKW TRO, Seed learned from KKW that it did, in

21

fact, disclose the

to Coty, without Seed's consent, along with a number of

22

other confidential documents containing trade secret and proprietary information, including

23
24
25
26
27
28
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COMPLAINT

 1

64.

In addition, given the discovery of the improper disclosures of trade secret

2

information by KKW to Coty, Seed is informed and believes that similar improper use and

3

disclosure of information was made by King Kylie to Coty. Indeed, during the KKW transaction

4

discussions, KKW has admitted it shared highly confidential King Kylie information with Coty.

5

65 .

Recognizing the imminent threat of harm Seed was likely to sustain without

6

injunctive relief, this Court granted Seed' s request for a temporary restraining order to enjoin

7

KKW and all those acting in concert with it from directly or indirectly disclosing,

8

misappropriating, or facilitating the disclosure or misappropriation of, or sharing in any way any

9

details related to the Seed-KKW Beauty business relationship or arrangement with Coty.

10

66.

These details include, at a minimum,

11

terms thereof, information about license use, marketing obligations, product launch and

12

distribution, revenue sharing, intellectual property ownership, specifications, ingredients,

13

formulas , plans and other information about Seed products.

14

FIRST CAUSE OF ACTION

15

Misappropriation of Trade Secrets in Violation of
California Uniform Trade Secret Act, Cal. Civ. Code§ 3426 et seq.

16

(Against All Defendants)

17
18
19
20
21
22
23
24

67.

Seed incorporates by reference each and every allegation contained in paragraphs

1 through 66 of this Complaint.
68 .

Seed has developed, maintained, owns and possesses the Seed Beauty Trade

Secrets, which contain confidential, proprietary, and highly sensitive commercial trade secret
information, as alleged and described above. This includes, but is not limited to, the details and
terms of its business arrangements with its business partners,
trade secret information necessarily learned or exchanged in

25
26
27
28
GOODWIN PROCTER LLP
A TIORNEYS AT LAW
SIUCDN VALLEY

the

17
COMPLAINT

 1
2
3

69.

The Seed Beauty Trade Secrets are not generally known in the beauty industry or

4

outside of Seed Beauty and its exclusive beauty brand and cosmetic partners that are subject to

5

strict confidentiality and non-disclosure obligations.

6

70.

The Seed Beauty Trade Secrets are highly valuable to Seed in the course of

7

conducting their business, because Seed derives great economic and commercial value from the

8

information not being made public or generally known, and any competitor who acquired such

9

information would be given an unfair competitive advantage.

10

71 .

Seed Beauty goes to great lengths and has taken reasonable measures to ensure

11

that its confidential, proprietary, and trade secret information, including the Seed Beauty Trade

12

Secrets, remain secret and confidential,
to the public and/or Seed Beauty' s competitors who could, if privy to the Seed Beauty

13

14

Trade Secrets, use this information to harm Seed Beauty' s existing relationships, unfairly

15

compete against Seed Beauty for other exclusive relationships in the beauty and cosmetics

16

industry, and/or engage in any other anti-competitive behavior.

17

72 .

Due to these security measures, Seed's confidential and proprietary trade secret

18

information is not readily ascertainable or otherwise made available to others in the cosmetics

19

industry-or any other industry-through any legitimate or proper means.

20
21

73 .

While King Kylie and KKW are in possession of certain Seed Beauty Trade

Secrets as necessary for the operation of the business partnership with Seed,

22
23
24

the Seed Beauty Trade Secrets to
any third parties, including especially Seed Beauty' s competitors, such as Coty.
74.

Nonetheless, Coty, acting in active concert with KKW, improperly acquired Seed

25

Beauty Trade Secrets through its contemplated acquisition and deal negotiations with KKW,

26

including, without limitation, the confidential

27

sensitive proprietary and financial information, and other to trade secret information pertaining to

28

Seed' s business arrangement with KKW.

, highly

GOODWIN PROCTER LLP
A TIORNEYS AT LAW
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COMPLAINT

 1

75 .

On information and belief, Coty engaged in this same improper conduct during its

2

negotiations with and acquisition of Defendant King Kylie. On information and belief, Coty

3

requested and King Kylie unlawfully disclosed Seed Beauty Trade Secrets to Coty, including

4

without limitation, confidential trade secret information pertaining to the details of Seed's

5

business arrangement with King Kylie and highly sensitive proprietary and financial information.

6

76.

Defendants Coty's and King Kylie 's conduct constitutes misappropriation and

7

misuse of Seed's confidential and trade secret information in violation of CUTS A because, on

8

information and belief, Defendants improperly disclosed, acquired, and/or used the information

9

without Seed' s consent.

10

77.

Coty knew or should have known under the circumstances that the information

11

obtained from KKW and King Kylie consisted of confidential trade secrets and has not returned

12

the information improperly acquired from King Kylie or KKW. Upon information and belief,

13

Coty is retaining and using Seed' s confidential and trade secret information.

14

78 .

As such, Coty has misappropriated, and a serious and imminent threat of

15

misappropriation continues to exist with respect to, the Seed Beauty Trade Secrets, including, on

16

information and belief, through Coty' s reliance on trade secret information improperly collected

17

and analyzed during the acquisition of King Kylie and the anticipated acquisition of KKW and its

18

use of such information to increase its competitive position in the industry against Seed. Coty,

19

through its improper acquisition of Seed Beauty Trade Secrets, is poised to capitalize on Seed' s

20

confidential and proprietary trade secret information and better understand Seed's unique

21

business model and partnership structure.

22

79.

Given the foregoing, if Defendants are not enjoined, they will continue to

23

misappropriate and use Seed' s trade secret information for their own benefit and to Seed' s

24

detriment.

25

80.

As a direct and proximate result of Defendants' wrongful conduct, Seed has

26

suffered, and if Defendants' conduct is not stopped, will continue to suffer severe and irreparable

27

competitive harm.

28
GOODWIN PROCTER LLP
A TIORNEYS AT LAW
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COMPLAINT

 1

81.

Seed seeks preliminary and permanent injunctive relief to recover and protect its

2

confidential, proprietary, and trade secret information and to protect other legitimate business

3

interests. Specifically, Seed seeks injunctive relief prohibiting Defendants from any further use,

4

misappropriation, or disclosure of the Seed Beauty Trade Secrets, including without limitation the

5

and any information derived therefrom, to compel Coty to return all materials

6

incorporating, disclosing, or derived from Seed Beauty Trade Secrets, and/or to prevent

7

Defendants from further benefitting from their own wrongful conduct. Seed's business operates

8

in a highly competitive market and will continue to suffer irreparable harm unless and until Coty

9

is enjoined by order of this Court.

10

82 .

Seed has no adequate remedy at law for the present and threatened future injuries

11

being caused by Defendants because it would be impossible to quantify their losses in monetary

12

terms and because Defendants will continue to engage in their wrongful misappropriation and

13

irreparably harm Seed unless and until enjoined from doing so.

14

83 .

The acts of misappropriation committed by Defendants were done willfully,

15

maliciously, oppressively, and/or fraudulently with the deliberate intent to injure Seed' s business

16

and financially benefit Defendants' business, thereby entitling Seed to an award of exemplary

17

damages in a sum to be proven at trial under Civ. Code§ 3426.3.

18

SECOND CAUSE OF ACTION

19

Breach of Contract

20

(Against King Kylie)

21
22
23

84.

Seed incorporates by reference each and every allegation contained in paragraphs

1 through 83 of this Complaint.
On June 9, 2016, Seed and King Kylie entered into

24
25
26
27
28
GOODWIN PROCTER LLP
A TIORNEYS AT LAW
SIUCDN VALLEY

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COMPLAINT

 1

86.

Since the

, Seed has performed

2

and continues to perform all of its obligations

3

and all conditions precedent to the performance of Seed

4

and/ or been satisfied.

5

ave occurred

King Kylie expressly agreed that it would

6
7
8
9
10
11

12
13

14
15
16

90.

On information and belief, King Kylie has breached

by, among

17

other things, partnering with Coty to develop or manufacture color cosmetics products outside of

18

the

19
20

in violation of
91.

On June 1, 2020, Coty issued a press release. In the release, Coty admitted that it

was working with King Kylie to develop new products in violation of the

21

Specifically, Coty listed as a risk factor the ability to gain "market acceptance of

22

new products, including new products related to Kylie Jenner's existing beauty business, any

23

relaunched or rebranded products and the anticipated costs and discounting associated with such

24

launches and rebrands." 21

25
26

92 .

Further strengthening this belief, Seed is informed and believes that Coty, through

its employees, on June 10, 2020, placed a significant order of various different Kylie Cosmetics

27
21

28

See https://www.coty.com/in-the-news/press-release/coty-announces-strategic-transformationand-definitive-agreement-kkr-wella.

GOODWIN PROCTER LLP
A TIORNEYS AT LAW
SIUCDN VALLEY

21
COMPLAINT

 1

products, which Seed believes to be for the sole purpose of attempting to recreate those products.

2

This order was made from a French address and did not identify Coty as the recipient. However,

3

upon researching the address, Seed learned that the address belonged to Coty.

4

93 .

Seed is informed and believes, and thereupon alleges, that Coty has agreed with

5

King Kylie to develop new products in violation of the

6

confidential non-trade secret information covered by

7
8
9
10

94.

proven at trial.
95 .

King Kylie 's breach of

was a substantial factor in causing Seed' s

harm.

13

THIRD CAUSE OF ACTION

14

Intentional Interference with Contract

15

(Against Coty)

16
17
18

Seed

has been and continues to be irreparably harmed and has suffered damages in an amount to be

11

12

As a direct and proximate result of King Kylie 's breach of

96.

Seed incorporates by reference each and every allegation contained in paragraphs

1 through 29, 35-36, and 48-58 of this Complaint.
97.

Seed is informed and believes that one of Coty' s primary objectives in its

19

acquisition of King Kylie, and in its anticipated acquisition of KKW, is to grow and expand its

20

color cosmetics segment.

21

However, on information and belief, Coty was and is aware of the

22
23

, as set forth above.

24

On information and belief, Coty nonetheless proceeded with the acquisition of

25

espite its knowledge of the exclusivity requirements under the

26
27
28

100.

Now, on information and belief, Coty and King Kylie are presently working

together to develop and manufacture color cosmetic products in contravention of

GOODWIN PROCTER LLP
A TIORNEYS AT LAW
SIUCDN VALLEY

22
COMPLAINT

 1
2

but still

3
4
5
6

On information and belief, Coty was aware of King Kylie's

7

with Seed, including, but not limited to,

8
9

On information and belief, Coty induced King Kylie's contractual breach of its

10
11

12
and was a substantial factor in causing

13

14

harm to Seed.

15
16

105.

Coty knew that disruption of performance was certain or substantially certain to

106.

As a direct and proximate result of Coty' s intentional conduct, Seed has suffered

occur.

17
18

and will continue to suffer irreparable harm and significant damages in an amount to be proven at

19

trial.

20

107.

As a direct and proximate result of the conduct alleged herein, Coty will be

21

unjustly enriched in an amount to be proven at trial. For example, on information and belief,

22

Coty has been unjustly enriched by receiving business opportunities that rightly belong to Seed.

23

108.

Coty performed the foregoing acts, conduct, and omissions fraudulently,

24

maliciously, and/or oppressively, with the intent and design to damage Seed. By reason of this

25

conduct, Seed is entitled to recover punitive damages in an amount to be determined at trial.

PRAYER FOR RELIEF

26
27
28

WHEREFORE, Plaintiffs Seed Beauty and BETA Beauty pray for the following relief:
A.

Judgment in Plaintiffs ' favor on the causes of action alleged herein;

GOODWIN PROCTER LLP
A TIORNEYS AT LAW
SIUCDN VALLEY

23
COMPLAINT

 1

B.

Injunctive relief, including but not limited to :

2

1.

a temporary restraining order and preliminary and permanent

3

injunction enjoining Coty from, among other activity, reviewing,

4

discussing, disclosing or misappropriating the Seed Beauty Trade

5

Secrets, including without limitation

6

11.

a temporary restraining order and preliminary and permanent

7

injunction requiring Coty to certify through sworn affidavit that all

8

of the Seed Beauty Trade Secrets have been returned or

9

sequestered;

10

111.

a temporary restraining order and preliminary and permanent

11

injunction requiring Coty, through its counsel, to create a log

12

identifying Coty employees, agents, and contractors who were

13

privy to any information related to

14

information provided, and the circumstances relating to the

15

provision of such information; and

16

a temporary restraining order and preliminary and permanent

17

injunction enjoining Coty from, among other activity, developing

18

color cosmetic products with King Kylie during the pendency of the

, the

19
20

C.

21

permitted by law;

22

D.

23
24

Damages in an amount to be proven at trial to the maximum amount

Unjust enrichment in an amount to be proven at trial to the maximum

amount permitted by law;
E.

A reasonable royalty from Coty and King Kylie in connection with the

25

Seed Beauty Trade Secrets to the maximum amount permitted by California Civil Code

26

section 3426.3(b );

27

F.

28

Exemplary damages to the maximum amount permitted by California Civil

Code section 3426.3(c);

G OODWIN PROCTER LLP
A TIORNEYS AT LAW
S IUCDN V ALLEY

24
COMPLAINT

 G
2

3

Code section 3426.4,
H.

4

5
6

For attorneys' fees to the maximum amOL111t pennitted by California Civil

The seizure nnd return of Seed' s trade secret infonnation;

Costs of suit incurred herein, and attorneys' fees as allo\\'ed by lmv or
contract; and
J.

Such other and further relief as this Court may deem just and proper.

7
8

9

10
11

12
13

14
15
16
17
18
19
20
21
22

23

24
25
26

Dated: June 30, 2020

Respectfully submitted,

Bya~

Neel Chatterjee (SBN 173985)
N01011e1jec(t7,g,10Jwin/c11v.com
GOODWIN PROCTER LLP
601 l'vlarshall Street
Redwood City, California 94063
Tel.: +I 650 752 3100
Fax: + I 650 853 I 038
Jennifer Briggs Fisher (SBN 24132 1)

.IFisher(fr}good1-vin /01 v.com

Nicholas l\rl. Costanza (SBN 306749)
N(osta11::a(!1!g<1odi-1,•i11/m1·.com
Megan D. Bettles (SBN 328161)
lvfBettles(~1_,gooclwi11/aw.cum
GOODWIN PROCTER LLP
Three Embarcadero Center
San Francisco, California 941 11
Tel.: + I 415.733.6000
Fax.:+ 1 415.677.904 1
Amanda H. Russo (SBN 3196 17)
AR11sso(jJ1gnoclwinlaw. com
GOODWIN PROCTER LLP
60 I S. Figueroa St., 41 st Floor
Los Angeles, California 90017
Tel.: +1 2 13.426.2500
Fax.: + I 213.623.1673
Attorneys for Plaintiff
SEED BEAUTY, LLC and BETA BEAUTY,
LLC

27

28
, '()P\\l'.

1'1:,Y [U( I LI'

'1·Jr .J,-.; AJ r An'

..,_::11 ....... \mn

25
COMPLAINT

 VERI FICAT ION

1
2
3

I, John Nelson, declare:

4

lam the Co-Founder and Chief Executive Officer of Pla intiff Seed Beauty, LLC. which is

5
6

sole member of Plaintiff Beta Beauty, LLC, in the above-titled mater.
I have read the foregoing Verified Complaint for (1) Violations of California Uniform

7

Trade Secret Act, Cal. Civ. Code§ 3426 et seq.; (2) Breach of Contract; (3) Intentional

8

Interreference with Contractual Relations; and (4) Injunctive Relief and kno"" the contents

9

thereof.

lO
11

The same is true of my own knowledge, except to those matters which are therein stated
on information and belief, and, as to those matters, I believe it to be true.

12
13
14
15

I declare under penalty of perjury under the laws of the State of California that the
foregoing is true and correct.
Executed this

Z..? day of June, 2020

16
17

JOHN NELSON

18
19
20

21
22

23
24
25

26
27
28
GooDWIN PROCTER LLP
ATTCWlE'fS AT LAW
5'UCON VAIJ..EY

COMPLAINT

 REDACTED
Public-Redacts materials
from conditionally sealed

record.

EXHIBIT A

THIS DOCUMENT HAS BEEN REDACTED IN ITS ENTIRETY.

REDACTED
Public-Redacts materials
from conditionally sealed

record.

EXHIBIT 

THIS DOCUMENT HAS BEEN REDACTED IN ITS ENTIRETY.