20VECV00684

Assigned for all purposes to: Van Nuys Courthouse East, Judicial Officer: Theresa Traber
Electronically FILED by Superior Court of California, County of Los Angeles on 06/19/2020 01:24 PM Sherri R. Carter, Executive Officer/Clerk of Court, by A. Salcedo,Deputy Clerk

1 Neel Chatterjee (SBN 173985)

NChatterjee@goodwinlaw.com
2 GOODWIN PROCTER LLP
601 Marshall Street
3 Redwood City, California 94063
Tel.: +1 650 752 3100
4 Fax: +1 650 853 1038
5 Amanda H. Russo (SBN 319617) REDACTED
ARusso@goodwinlaw.com Public-Redacts materials from
6 GOODWIN PROCTER LLP conditionally sealed record.
601 S. Figueroa St., 41st Floor
7 Los Angeles, California 90017
Tel.: +1 213.426.2500
8 Fax.: +1 213.623.1673
9 Nicholas M. Costanza (SBN 306749)
NCostanza@goodwinlaw.com
10 GOODWIN PROCTER LLP
Three Embarcadero Center
11 San Francisco, California 94111
Tel.: +1 415.733.6000
12 Fax.: +1 415.677.9041
13 Attorneys for Plaintiff
SEED BEAUTY, LLC and MM
14 COSMETICS, LLC
15 SUPERIOR COURT OF THE STATE OF CALIFORNIA
16 COUNTY OF LOS ANGELES
17 VAN NUYS COURTHOUSE EAST
18
SEED BEAUTY, LLC, and MM Case No. ____________________
19 COSMETICS, LLC
[VERIFIED] COMPLAINT FOR:
20 Plaintiff,
(1) VIOLATION OF CALIFORNIA
21 v. UNIFORM TRADE SECRET ACT, CAL.
22 KKW BEAUTY, LLC, formerly KKW CIV. CODE § 3426 ET SEQ.; AND
BEAUTY, INC.; and DOES 1-25, (2) DECLARATION OF RIGHTS UNDER A
23 CONTRACT
Defendants.
24 DEMAND FOR JURY TRIAL
25

26

27

28
GOODWIN PROCTER LLP
ATTORNEYS AT LAW
SILICON VALLEY

COMPLAINT
 1 Plaintiffs Seed Beauty, LLC ("Seed Beauty") and MM Cosmetics, LLC ("MM

2 Cosmetics" and collectively with Seed Beauty as "Seed" or "Plaintiffs") hereby complain and

3 allege against Defendant KKW Beauty, LLC, f01merly KKW Beauty, Inc., ("KKW" or

4 "Defendant" and collectively with Seed as the "Patties") and DOES 1 through 25 (collectively

5 with KKW as "Defendants") as follows:

6 NATURE OF CLAIMS

7 1. This is a case to prevent inepat·able hatm to Seed arising from the imminent and

8 material threat ofKKW's misappropriation of highly sensitive and confidential trade secret

9 inf01mation through Defendat1t KKW's intended disclosure of an

10

11 one of Seed's largest competitors, Coty. A tme and conect copy

12 I is attached hereto as Exhibit A.

13 THE PARTIES
14 2. Plaintiff Seed Beauty, LLC, is a Califomia limited liability company, with its

15 principal place of business in Oxnard, Califomia.

16 3. PlaintiffMM Cosmetics, LLC is a Califomia limited liability company, with its

17 principal place of business in Oxnard, Califomia. MM Cosmetics, LLC is a wholly-owned

18 subsidiaty of Seed Beauty.

19 4. Defendat1t KKW Beauty, LLC, f01merly KKW Beauty, Inc., is a Califomia limited

20 liability company, with its principal place of business in Woodland Hills in Los Angeles County,

21 California. Upon inf01mation and belief, KKW Beauty, Inc., a Califomia corporation, convelied

22 into KKW Beauty, LLC in Mat·ch of2020.

23 5. The tme names and capacities of the Defendants named herein as DOES 1 through

24 25, inclusive, m·e lmknown to Seed at this time. Seed sues these Defendants by such fictitious

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

26 named Defendants when Seed ascertains the identity of such Defendants. Seed is inf01med and

27 believes, and thereon alleges, that each and eve1y one of these Defendants is responsible in some

28 manner for the threatened misappropriation of Seed' s trade secrets which will damage and
GooDWlN PROCTER LLP
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COMPLAINT
 1 irreparably hatm Seed, and that Seed's inevitable injmy, as alleged herein, will be proximately

2 caused by their threated misappropriation.

3 JURISDICTION AND VENUE

4 6. This Comi has subject matter jmisdiction over this action under Article VI,

5 Section 10 of the Califomia Constitution, exercisable 1mder Section 410.10 of the Califomia Code

6 of Civil Procedme. The Comt also has jmisdiction over this action pmsuant to Section 1060 of

7 the Califomia Code of Civil Procedme.

8 7. This Comi has personal jurisdiction over Defendant KKW because it resides, and

9 conducts business in, Califomia.

10

11

12

13 9. Venue is also proper in this Comt pursuant to Califomia Code of Civil Procedure

14 §§ 395 and 395.5 because the contract was entered into, in pati, in this Com1ty, the comse of

15 conduct complained of herein occmred in Los Angeles County, Califomia, and because

16 Defendat1t transacts business and may be found within Los Angeles County.

17 FACTUAL ALLEGATIONS

18 A. Seed Beauty And Its Exclusive Relationships

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

20 and seller ofbeauty and cosmetics products.

21 11. Seed Beauty has a 1mique business model which allows it to incubate new brands

22 and products and swiftly bring them to ma1·ket. For example, Seed Beauty's unique business

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

24 direct-to-consumer brands all m1der one roof and bring products to market in record speed based

25 entirely on consumer dematld. This business model, combined with the affordable, safe, and

26 high-quality nature of Seed Beauty's products, has skyrocketed young statt-up brands to beauty

27 and cosmetics sensations over a period of only a few yem·s.

28
GooDWlN PROCTER LLP
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COMPLAINT
 1 12. One of Seed Beauty's most unique competencies is its ve1iical integration

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

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

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

5 always been impmiant to Seed Beauty.

6 13. Following the rapid and extraordinruy success of its many brands, several different

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

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

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

10 Kylie Cosmetics, KKW Beauty, and Tati Beauty.

11 14. In 2016, Seed Beauty entered into an

12 Kylie LLC wherein Seed B

13 Kylie Cosmetics products. Since entering into the relationship with Seed Beauty, Kylie

14 Cosmetics dismpted the mru·ket ru1d becrune one of the fastest growing beauty brands in the

15 world. Kylie Cosmetics cunently has over 800+ different product SKUs developed ru1d owned

16 by Seed Beauty. This business deal helped King Kylie enonnously. In 2019, media repmis

17 valued King Kylie at over $ 1 billion after Coty, Inc. ("Coty") pmchased a 51% equity interest for

18 a repmied $600 million.

19 15. Neru·ly one yeru· after Seed Beauty began working on the Kylie Cosmetics brand,

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

21 beauty and cosmetics brand, which was operated through Defendant KKW. And on or around

22

23 , wherein Seed Beauty

24

25

26
-
obtained

I
rights to develop, manufacture, and distribute KKW Beauty products.

27 16. Seed Beauty' s business model, and the contracts related to its vru·ious product lines,

28 are maintained as trade secrets by Seed Beauty. Most importantly, the deals between
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COMPLAINT
 1 Seed Beauty and its pru1ners ru·e carefully maintained as trade secrets and ru·e not shru·ed with

2 competitors. The stmcture of those pru1nerships, as well as the economic temlS, are key

3 differentiators under Seed Beauty's business m odel and are important to Seed Beauty's success.

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

5 confidential information.

6 17. Because Seed Beauty' s business includes full scale, one-stop-shop creative and
7 logistical development services for ymmg and/or strut-up beauty brands, the details of Seed

8 Beauty's exclusive relationships with its beauty brand pat1ners necessru·ily includes highly

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

10 negotiated deal tenns) as well as the operation of Seed Beauty and its business model. As such,

11 Seed Beauty's trade secrets include, but are not limited to, non-public proprietruy and confidential

12
13

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15
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17
18
19
20 (collectively, "Seed Beauty Trade Secrets").

21 18. The Seed Beauty Trade Secrets ru·e not generally known in the beauty indust1y, and
22 could not be leamed by others, if at all, without considerable expenditure of time, effott, or

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

24 subject to strict confidentiality and non-disclosure obligations.

25 19. Such confidential trade secrets are highly valuable to Seed Beauty in the course of
26 conducting their business, because Seed Beauty derives economic value from the infotmation not

27 being made public, and any competitor who acquired such infotmation would be given an unfair

28 competitive advru1tage.
GooDWlN PROCTER LLP
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COMPLAINT
 1 20. Specifically, the Seed Beauty Trade Secrets (including specifically
2 to which KKW has access to constitute trade secrets that are

3 essential to Seed Beauty' s competitive position in the beauty and cosmetics industly.

4 21. As a result, Seed Beauty goes to great lengths to ensme that the Seed Beauty Trade
5 Secrets, including specifically

6 are not disclosed t o the public and/or Seed Beauty's competitors who could, if privy to

7 the Seed Beauty Trade Secrets, use this info1mation to hrum Seed Beauty's existing relationships,

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

9 cosmetics industly, and/or engage in any other anti-competitive behavior.

10 22. Such efforts by Seed Beauty to maintain the confidentiality of the Seed Beauty
11 Trade Secrets, include, but ru·e not limited to: (1) restricting access to the Seed Beauty Trade

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

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

14 restrictions, at the laborat01y and development sites, and monitoring of the entire premises by

15 secmity persollllel employed by the office complex, (2) ensming that Seed Beauty's computer

16 network and systems are secme, including requiring passwords and other secmity verifications

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

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

19
20
21
22
23 . Additionally, all Seed

24 employees must sign non-disclosme agreements to ensme info1mation, including but not limited

25 to the Seed Beauty Trade Secrets, is kept private and confidential.

26 As indicated above,

27 I Specifically,

28
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19 24. Seed Beauty's competitive position would be gravely harmed if one of its
20 competitors were to gain access to the Seed Beauty Trade Secrets, as this would allow the

21 competing company to exploit many years' wo1ih of highly valuable knowledge and inf01mation

22 developed by Seed Beauty. In fact,

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GOODWJN PROCTER LLP
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COMPLAINT
 1

3 Secrets

4 25. There is a concrete threat that KKW will disclose Seed Beauty Trade Secrets to

5 one of Seed Beauty's largest competitors, Coty, tmless KKW is enjoined from doing so by this

6 Com1.

7 26. In 2016, when Seed Beauty entered into an pat1nership with King Kylie,

8 in connection with the development, manufacture, sale, and distribution ofKylie Cosmetics

9 products, Seed Beauty, King Kylie, and Kylie Jenner entered into

10 agreement. That agreement also had numerous material and highly confidential

11 terms.

12 27. In or around Jm1e 2019, mediarep011s suggested that Coty was interested in

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

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

15 was prohibited from disclosing Seed Beauty and King Kylie's tmderlying agreement to Coty, a

16 main competitor to Seed Beauty. King Kylie refused to confum or deny whether it had disclosed

17 the agreement to Coty.

18 28. On or around November 18, 2019, Coty issued a press release announcing its

19 intent to acquire the Kylie Cosmetics brand through purchasing a 51% equity interest in King

20 Kylie for $600 million. See https://www.cotv.com/in-the-news/press-release/coty-and-kylie-

21 jenner-announce-strategic-pat1nership-expand-beauty-brands. Shortly after this rumouncement,

22 John Nelson again notified King Kylie that it was prohibited from disclosing Seed Beauty and

23 King Kylie 's underlying agreement to Coty, and King Kylie still refused to confmn or deny

24 whether it had already disclosed the agreement to Coty.

25 29. On or around Januaty 6, 2020, Coty announced that the equity transaction between

26 King Kylie and Coty was completed. See https://www.coty.com/in-the-news/press-release/coty-

27

28
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COMPLAINT
 1 and-kylie-jellller-commence-strategic-partnership.1 Following this atmooocement, John Nelson

2 again notified King Kylie that it remained prohibited from disclosing Seed Beauty and King

3 Kylie's underlying agreement to Coty, and King Kylie neither confitmed nor denied whether it

4 had already disclosed the agreement to Coty. Further, Seed Beauty ooderstands that Seed

5 Beauty' s litigation cmmsel asked King Kylie's cmmsel whether Seed Beauty and King Kylie 's

6 ooderlying agreement and/or the te1ms therein had been disclosed to Coty, and King Kylie's

7 cooosel did not provide a clear, yes or no answer in response. As such, it remains ooclear

8 whether Seed Beauty and King Kylie 's ooderlying agreement was or has been fully disclosed to

9 Coty by King Kylie. Seed Beauty requested that Coty not close the transaction ootil this issue

10 was resolved. Coty and King Kylie ignored Seed Beauty's request and closed anyway. Shortly

11 thereafter, Coty alllloooced it was appointing a Coty-selected CEO for King Kylie.

12 30. Now, Seed Beauty has leamed that Coty intends to acquire the KKW Beauty brand

13 through purchasing an equity interest in KKW. On or aroood Jtme 3, 2020, various media outlets

14 reported that Coty is pursuing a collaboration with KKW Beauty regarding beauty products

15 following statements by Coty in a public filing. See, e.g.,

16 https://www.bloomberg.com/news/ruiicles/2020-06-03/coty-in-talks-with-kim-kru·dashian-after-

17 kylie-jem1er-deal. On inf01mation and belief, the "collaboration" reported in the press is actually

18 a maj ority-stake investment in KKW. Seed Beauty is also infonned and believes that in

19 c01mection with this anticipated transaction, representatives of Coty have requested cettain

20 disclosures from KKW, including but not limited to copies of material commercial agreements.

21 Such requests clearly would encompass as well as other categories of

22 inf01mation that would include Seed Beauty Trade Secrets relating to

23

24 31. On inf01mation and belief, KKW is represented by the same cooosel that

25 represented King Kylie in collllection with its transaction with Coty.

26 1
While Seed Beauty contends that both this conduct by Coty and
27 King Kylie violated material tetms of the agreement, this complaint
is limited to KKW ' s anticipated wrongful as a Beauty expressly
28 rese1ves any and all rights against King Kylie and Coty with respect to its agreement with King
Kylie or othetwise.
GooDWlN PROCTER LLP
ATTORN£YSATLAW
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COMPLAINT
 1 32. Because of the previous failmes to provide a clear answer related to the disclosme

2 and because of the imminent discussions between KKW and

3 Coty, Seed Beauty is gravely concemed that KKW will disclose Seed Beauty Trade Secrets to

4 Coty unless KKW is enjoined from doing so by this Com1. Such an unlawful disclosme would

5 cause ineparable hmm to Seed Beauty, including but not limited to by placing its most sensitive

6 and highly confidential trade secret inf01mation in the hands of one of its largest competitors.

7 FIRST CAUSE OF ACTION

Misappropriation of Trade Secrets in Violation of
8 California Uniform Trade Secret Act, Cal. Civ. Code § 3426 et seq.
9 (Against All Defendants)
10 33. Seed incorporates by reference each and evety allegation contained in paragraphs
11 1 through 32 of this Complaint.
12 34. Seed owns a11d possesses the Seed Beauty Trade Secrets~ which contain
13 confidential, proprietaty, and highly sensitive conunercial inf01mation, as alleged and described
14
15
16
17
18
19
20
21 example.
22 35. The Seed Beauty Trade Secrets m·e not generally known in the beauty industty or
23 outside of Seed Beauty and its exclusive beauty brand and cosmetic pm1ners that are subject to
24 stt·ict confidentiality and non-disclosme obligations.
25 36. Such confidential tt·ade secrets are highly valuable to Seed Beauty in the comse of
26 conducting their business, because Seed Beauty derives economic value from the inf01mationnot
27 being made public, and any competitor who acquired such inf01mation would be given an unfair
28 competitive advantage.
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COMPLAINT
 1 37. Seed Beauty goes to great lengths- as detailed in paragraphs 22 and 23- to ensme

2 that the Seed Beauty Trade Secrets, including specifically

3 are not disclosed to the public and/or Seed Beauty's

4 competitors who could, if privy to the Seed Beauty Trade Secrets, use this infonnation to hann

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

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

9
behavior.

38. While KKW is in possession of cettain Seed Beauty Trade Secrets, including

KKW is prohibited from disclosing the Seed

-
II
10 Beauty Trade Secrets to any third parties, including especially Seed Beauty's competitors, such as

11 Coty.

12 39. In light ofKKW's possession of, and Coty's request for, Seed Beauty Trade

13 Secrets, a serious and imminent threat of misappropriation of the Seed Beauty Trade Secrets by

14 KKW exists at this time, including but not limited to through any intentional (or even inadvettent)

15 disclosure and/or any other Seed Beauty Trade

16 Secrets, to Coty.

17 40. As such, ifKKW is not enjoined from doing so, it will misappropriate and use the

18 Seed Beauty Trade Secrets for its own benefit (i.e., receipt of a substantial acquisition payment)

19 and to Seed's detriment (i.e. , providing Seed Beauty Trade Secrets to Seed's main competitor, at

20 a minimum).

21 41. Seed seeks preliminruy and petmanent injtmctive relief to recover and protect its

22 confidential, proprietruy, and tt·ade secret infonnation and to protect its other legitimate business

23 interests. Seed's business operates in a competitive mru·ket and will suffer ineparable hrum

24 absent injunctive relief.

25 42. Seed has no adequate remedy at law for the present and threatened futme injmies

26

27

28 . KKW's threatened disclosme

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COMPLAINT
 1 and misuse of Seed Beauty Trade Secrets allows KKW and their potential acquirer to capitalize

2 on Seed's confidential and proprietmy trade secret infonnation and better understand Seed's

3 unique business model and pminership structure. Seed, therefore, is entitled to preliminmy and

4 petmanent injunctive relief prohibiting KKW from any misuse or disclosme of the Seed Beauty

5 Trade Secrets, and inf01mation derived therefrom, to compel KKW to retum all materials

6 incmporating, disclosing, or derived from Seed Beauty Trade Secrets, and/or to prevent KKW

7 from further benefitting from KKW's wrongful conduct.

8 SECOND CAUSE OF ACTION

9 Declaratory Relief

10 That Disclosure of the to Coty Violates

11

12 (Against All Defendants)

13 43. Plaintiff incorporates by reference each and evety allegation contained in

14 pm·agraphs 1 through 42 of this Complaint.

15 44. An actual controversy exists between the pmties within the meaning of Califomia

16 Code of Civil Procedme Section 1060, including specifically whether

17 , to Coty in connection with Coty's

18 As

19

20 and, to date, KKW has not sought pemlission from Seed to disclose this

21

22 As such, this Comt has the authority to issue a declm·atOiy judgment conceming

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COMPLAINT
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PRAYER FOR RELIEF

2 WHEREFORE, Plaintiff Seed Beauty prays for the following relief:

3 A. J udgmcnt in Plaintiffs' favor on the causes of action alleged herein;

4 B. Injunctive relief, including but not limited to a temporary restraining order

5 and permanent injunction enjoining KKW from. among other activity. disclosing Seed's
- - --
1

6 Confidential Information,

7 and/or otlter Seed Beauty Trade Secrets, to Coty or any other similarly-situated third
g party;

9 C. Damages in an amount to be proven at trial to the maximum amount

10 pennitted under California Civil Code section 3426.3(a);

11 D. Unjust enrichment by KKW in an amount to be proven at trial to the

12 maximum amount permitted by California Civil Code section 3426.3(a);

13 E. A reasonable royalty in connection with the Seed Beauty Trade Secrets to
14 the maximum amount permitted by California Civil Code section 3426.3(b);

15 F. Exemplary damages to the maximum amount permitted by California Civil

16 Code section 3426.3(c);

17 G. Costs of suit incurred herein, and attorneys' fees as allowed by law or

18 contract; and
19 H. Such other and further relief as this Court may deem just and proper.
20

21 Dated: June 19, 2020 Respectfully submitted,

22

23 By:/s/ 0-----:: /2-----

Neel Chatterjee (SBN 173985)
24 NChatlerjee@goodwinlaw.com
GOODWIN PROCTER LLP
25 601 Marshall Street
Redwood City, California 94063
26 Tel.: +1 650 752 3100
Fax: +l 650 853 1038
27
Amanda H. Russo (SBN 319617)
28 ARusso@goodwinlaw. com
GooDWIN PROCTER LLP
AM'\>Rnf:'t$ A 1' lAw
SI..IXON VAU...fr 13
COMPLAINT
 1 VERIFICATION

3 I, John Nelson, declare:

4 I am the Co-Founder and Chief Executive Officer of Plaintiff Seed Beauty, LLC, which is

5 sole member of Plaintiff MM Cosmetics, LLC, in the above-titled mater.

6 I have read the foregoing Verified Complaint for (1) Violation of California Uniform

7 Trade Secrete Act, Cal. Civ. Code§ 3426 et seq.; and (2) Declaration of Rights Under a

8 Contract and know the contents thereof.

9 The same is true of my own knowledge, except to those matters which are therein stated

10 on information and belief, and, as to those matters, I believe it to be true.

11

12 I declare under penalty of perjury under the laws of the State of California that the

13 foregoing is true and correct.

14 Executed this 'l~ day of June, 2020

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VERIFICATION OF COMPLAINT