McKennon Law Group recently filed a case on behalf of Therabotanics, LLC, a subsidiary of Ideal Living, for breach of contract, unfair competition, misappropriation of trade secrets, harmful interference with contract, and conversion of assets against Sephora, USA, Inc. and Solazyme, Inc. Therabotanics and Solazyme had entered into an exclusive agreement for a joint venture to sell a line of algae-based skin care products through a television infomercial. The exclusive agreement contained a carve-out that allowed Solazyme to sell a “premium” product with other distributors, but at a higher price and under a specific name.
The complaint alleges that Sephora and Solazyme entered into a separate joint venture to sell the same or similar skin-care products in violation of the agreement between Therabotanics and Solazyme, and they did this knowingly and with the intent to frustrate the agreement between Therabotanics and Solazyme. The complaint alleges that Therabotanics shared trade secrets and other assets with Solazyme to develop the skin-care product, and that Solazyme used those trade secrets and assets to develop a competing product with Sephora in violation of the agreement between Therabotanics and Solazyme. The product sold by Sephora was not a “premium” product being sold at a higher price, but instead the same or similar product that was to be sold by Therabotanics, and was marketed at the same price point. Solazyme thereafter backed out of the agreement with Therabotanics and continued its sales with Sephora.
Solazyme and Sephora challenged the complaint filed by Therabotanics on the grounds that their conduct did not amount to unfair competition or harmful interference, and asserted that there was no wrongdoing on the part of either party. The court found that Therabotanics sufficiently alleged that Sephora had wrongfully interfered with the agreement between Therabotanics and Solazyme, and overruled many of Sephora’s and Solazyme’s objections to Therabotanics claim for unfair competition, allowing Therabotanics the opportunity to state with more specificity the wrongdoing that is alleged to have occurred. The court also overruled Sephora and Solazyme’s objections to Therabotanics claim for conversion of assets. Thus, Sephora and Solazyme will be forced to defend themselves against these claims in court. A further synopsis of the court’s ruling was published on Law360.com at the following link: http://www.law360.com/articles/416708/sephora-can-t-dodge-competition-claims-over-skin-care-deal. Commenting on the court’s ruling, Robert McKennon of the McKennon Law Group told Law360:
We are very pleased that the Court has substantially overruled Defendants Solazyme, Inc.’s and Sephora, USA, Inc.’s attempt to have my clients’ claims dismissed at the demurrer stage of this litigation. We are equally pleased that the Court has allowed us to amend our causes of action for fraud and unfair competition to add the requisite specificity to pursue those claims against Solazyme and Sephora, as well as against Solazyme’s Senior Vice President and General Manager, Frederick Stoeckel. We are confident that our clients will prevail in their claims against the defendants in this litigation.
