Keeping Up With the Kardashians stars Kim Kardashian West and Kylie Jenner are well known as creators of KKW Beauty and Kylie Cosmetics. However, it looks like their companies are doing so well that others might be trying to steal their secrets. The manufacturing company behind KKW Beauty and Kylie Cosmetics, Seed Beauty, is now claiming that their investor and competitor, Coty, tried to steal trade secrets from the inside.
Earlier this year, Kylie inked a deal with Coty, selling them a 51% stake in her company. This made Coty the majority stakeholder, along with the now former owners, King Kylie. Coty is the parent company of brands like Sally Hansen and CoverGirl, and has been struggling to keep up with the appeal of KKW Beauty and Kylie Cosmetics. Once they bought shares in the companies, Coty’s strategy was to market KKW Beauty to millennials, who grew up getting to know Kim, and Kylie Cosmetics to Gen Z-ers, who grew up with Kylie. Coty gained huge revenue for holding shares in Kylie Cosmetics, and is now part of KKW Beauty. Kylie Cosmetics cemented Kylie’s status as a beauty mogul, and Kim is set to become a billionaire soon through KKW Beauty. The half-sisters are standouts in the famous Kardashian family for their business savvy, and having the most Instagram followers.
As reported by Business Insider, Coty placed a recent investment in KKW Beauty, and Seed Beauty is suspicious of the company trying to steal their trade secrets. Coty along with former owner of Kylie Cosmetics, King Kylie, are cited in a civil lawsuit, alleging that King Kylie shared trade secrets from Seed Beauty with Coty. Seed Beauty, as the manufacturing brand behind Kylie Cosmetics and KKW Beauty, holds the recipes for Kylie’s and Kim’s “secret sauces.” If King Kylie was leaking manufacturing knowledge to Coty, it would give their other brands a big leg up. Coty bought a 21% stake in KKW Beauty for $200 million on Monday, leading Seed Beauty to bring legal action. They asked for an injunction to block KKW Beauty and Kylie Cosmetics from releasing any trade information to Coty. Seed Beauty had originally asked King Kylie to do the same, but believes that condition of their agreement was broken. They were granted the injunction against Kylie Cosmetics in June, and have now asked for the same agreement against KKW Beauty.
“Coty and King Kylie consistently refused to provide any assurances,” said Seed Beauty in a statement, adding that Coty’s investment, “really was a subterfuge to learn Seed’s confidential business methodologies.” Seed went on to say that they tried to resolve the matter privately out of respect for Kim and Kylie, but were forced to go public with the information. “This action is to stop Coty’s theft of Seed’s pioneering and proprietary digital-first business model that has revolutionized the cosmetics industry,” said Seed Beauty. This is just the latest setback for Kylie Cosmetics, as Forbes accused the company of forging documents earlier this year. The court date is set for October.
Source: Business Insider