A Delaware jury has ordered L’Oreal, a French personal care company, to pay Olaplex, a California based startup $US91.4 million ($135 million) for stealing its Trade Secrets (hair secrets) and breaching a contract. Additionally, L’Oreal infringed two patents corresponding to Olaplex’s widely-known system protecting hair during bleaching treatments. The jury also discovered that the beauty company’s act was intentional, thereby leaving the door open for the judge to substantially increase the monetary damages if he wishes to.

In 2015, Olaplex had accused the French giant L’Oreal of stealing its hair secrets in a meeting in California when the companies were talking about L’Oreal to buy the startup. However, L’Oreal stated that, in August 2014, it had independently conceived the use of a critical acid and developed its products.

In late June, Joseph Bataillon, the US District Judge ruled that the products of L’Oreal infringed the two patents at issue. The jury had to seek answers for three questions. The first one was whether the patents were valid, to begin with, or not. The second one was whether L’Oreal had stolen the trade secrets or not. The third was whether the company had broken the non-disclosure agreement (NDA) relating to them or not. Very clearly, the answer to all these three questions was yes.

With very little traditional advertising and no physical stores, Olaplex employs only fewer than 30 people. However, its core products launched in June 2014 on the company’s website after a trial by top hair colorists like Tracey Cunningham were quickly able to build a following. The products are known to reconnect and strengthen protein bonds during bleaching.

L’Oreal, whose hair-coloring innovations and advancements go back more than a century, revealed more than $30 million in sales for last year. The product offerings in question including all the three steps involved in the hair protection system are just one part of the division, with about 12% of L’Oreal’s revenue generated in 2018. But the products are sold under very prestigious labels like Matrix and Redken, which play a significant role in maintaining the brand’s overall identity.

By November 2014, SalonCentric, one of the largest beauty-supply distributors and wholesale salons, had put Olaplex on the US shelves, propelling it towards early success. According to Olaplex’s lawsuit, SalonCentric, owned by L’Oreal was smart enough to notice the product’s buzz and performance on various social media platforms and tried to hire the two scientists involved in inventing the product.

The Delaware case is Liqwd Inc. v. L’Oreal USA Inc., 17-cv-14, U.S. District Court, District of Delaware (Wilmington).