As predicted, the trade secrets battle between Olaplex, Inc. and L’Oreal continues – and L’Oreal has scored a fresh victory. On May 6, 2021, the Federal Circuit Court of Appeals overturned a $66 million judgment against L’Oreal and ordered a new trial – but only on one of Olaplex’s patent claims. The panel stated that Olaplex had entirely failed to show that its information was eligible for trade-secret protection, and that no reasonable jury could find otherwise.
At trial on its trade secret claims, Olaplex claimed that L’Oreal USA and its affiliates (including Matrix and Redken) had misappropriated trade secrets related to a less damaging method of bleaching hair contained in an unpublished patent application, financial information provided to L’Oreal subject to a non-disclosure agreement, and data about product “testing and know how” and “trials and errors.” The jury found that L’Oreal had misappropriated these trade secrets for more than $22 million in damages.
However, on appeal, the panel concluded that Olaplex had failed to provide specific proof that L’Oreal had “misappropriated anything secret.” For example, the hair-coloring method in question – using maleic acid during bleaching – wasn’t secret because the information was already publicly available in earlier patents and published patent applications. Further, the court faulted Olaplex for only categorizing the purported trade secrets “at a high level of generality,” which, it said, was not enough to show misappropriation.
The panel reversed the trial court’s denial of L’Oreal’s request for judgment as a matter of law on the trade secret claims, thus granting a verdict in L’Oreal’s favor on Olaplex’s trade secret claims in their entirety, but remanded part of Olaplex’s patent infringement claims for a new trial in Delaware federal court. We anticipate, however, that the Federal Circuit’s decision will not be the end of the appeal saga regarding Olaplex’s trade secrets.