The suit claims that Kim Kardashian West's KKW Beauty is following the footsteps of Kylie Cosmetics ... [+]
Kim Kardashian West and her half-sister Kylie Jenner have each built trendy cosmetics brands thanks to a massively successful partnership: The Kardashian-Jenners help design and promote their respective beauty lines—and Oxnard, California-based Seed Beauty handles everything else, from developing and manufacturing the cosmetics to packaging and shipping them to customers. Now the immensely profitable arrangement between Kardashian West and Seed seems to be on the rocks.
Late last week, Seed filed a civil lawsuit in California’s superior court against Kardashian West’s KKW Beauty, seeking protection of Seed’s trade secrets. According to the lawsuit, Kardashian West is on the verge of following in her sister’s footsteps and selling a majority of her business to beauty giant Coty, creating a “concrete threat” that KKW will share its secrets with Coty, a main competitor. Seed wants the court to prohibit KKW Beauty from sharing the information.Kardashian West has not commented on a possible Coty deal.
According to the complaint, which is heavily redacted, the trade secrets—which include Seed’s business model and “the contracts related to its various product lines”—are “essential to Seed Beauty’s competitive position in the beauty and cosmetics industry.” The suit describes in great detail how it keeps this information from getting out, including by making all employees sign non-disclosure agreements and using security personnel.
Despite their three-year partnership, Seed claims it has reason to be concerned that KKW Beauty will disclose confidential information to Coty, since Kardashian West’s half-sister Kylie Jenner may have already done the same thing. Jenner sold 51% of Kylie Cosmetics to Coty for $600 million earlier this year. The suit, which does not name Kylie Jenner or her company as a defendant, alleges that Seed asked Kylie Cosmetics numerous times over the course of its negotiations with Coty—which were rumored to have begun in June 2019 and ended when the deal closed in January—not to disclose confidential parts of their agreement. Each time, Jenner and her team refused to confirm or deny whether the company had shared the information with Coty, the suit claims, and the suit maintains that Seed could still sue Kylie Cosmetics.
Seed’s lawyers say the company still does not know whether Kylie or her team has shown Coty any of its trade secrets; according to its website, Seed appears to still manufacture at least some of Kylie Cosmetics products.. A spokesperson for Jenner and Kardashian West did not respond to Forbes’ request for comment.
Seed, a one-stop shop for beauty brands, is known for its fair cost, efficiency and speed: a product can go from idea to market in weeks with relatively little overhead. That has made it a popular choice for celebrities, like Jenner, Kardashian West and YouTuber Tati West, seeking to capitalize on their fame with trend-driven makeup lines. Seed has also created its own successful beauty line called Colourpop.
Jenner began outsourcing the logistics, manufacturing, development and shipping fulfillment of Kylie Cosmetics to Seed shortly after launching the business in late 2015. By 2018, Seed, which also has an outpost in Nanjing, China, had more than 500 employees, working on the Kylie Cosmetics line, according to the Kylie Cosmetics team; Jenner, who was responsible for the promotion, only had five full-time employees.
“Social media is an amazing platform...I have such easy access to my fans and my customers,” Jenner told Fobes in 2018, explaining that her biggest role in her company was the marketing.
In 2017, after Jenner and Kardashian West collaborated on a successful set of lip kits, Kardashian West partnered with Seed Beauty to make products for KKW Beauty under a deal similar to the one it had with Kylie Cosmetics. The KKW brand, which predominantly sells color cosmetics like highlighters and contouring kits, generated estimated revenues of $100 million in 2019. Like Kylie Cosmetics, the brand was initially launched online before moving into Ulta stores in October 2019. And with talks of a Coty deal around the corner, Kardashian West seems to be following in her younger sister’s footsteps once again—much to Seed’s chagrin.
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