Estee Lauder sued by beauty tech startup for alleged theft

Estée Lauder lipstick and eyeshadow. (Daniel Acker/Bloomberg)

NEW YORK - Estee Lauder was sued by a self-described “disruptive” startup that accused the cosmetics giant of effectively putting it out of business by stealing technology to boost sales from jet-setting travelers in hotels.

In a complaint filed on Friday night in Manhattan federal court, Nomi Beauty said Estee Lauder has been “driving literally billions in new revenue” to itself after abandoning contracts in 2018 and 2020, including means to determine consumers’ actual preferences for cosmetics instead of their stated preferences.

Nomi -- the name is a homophone for “know me,” as in the customer -- said its “secret sauce” was intended to help the parent of Clinique and MAC lipstick generate more revenue from luxury hotel duty-free shops and in-room purchases, and become less dependent on traditional retail stores.

Rather than honour its contracts or follow through on discussions to purchase Nomi outright, Estee Lauder allegedly starved Nomi’s hotel partners of products, while rolling out competing programs in China, Costa Rica, Malaysia, the United Kingdom and the United States.

These programs “rely on the very same trade secrets Nomi had been educating Lauder about for years,” the complaint said.

Nomi is seeking unspecified compensatory, punitive and triple damages.

Estee Lauder did not immediately respond to requests for comment.

“Nomi’s stolen innovations brought Estee Lauder into the information age, and Estee Lauder continues to profit from them wildly,” Nomi’s lawyer Matthew Schwartz said in an email.

Both companies are based in New York.

Since last February, Estee Lauder has pursued a “Beauty Reimagined” strategy, including prestige launches and a streamlining of its supply chain, to revive sliding sales. The strategy also called for up to 7,000 job cuts.