The U.S. Court of Appeals for the Federal Circuit has tossed a $66 million Delaware federal court ruling for Olaplex Inc, which had accused L'Oreal USA Inc of stealing its trade secrets and infringing patents related to its hair-bleaching technology.
U.S. Circuit Judge Richard Taranto wrote for a three-judge panel on Thursday that Olaplex failed to show its information was eligible for trade-secret protection and that no reasonable jury could find otherwise.
Taranto also remanded the case to Delaware federal court for a new trial on Olaplex's patent infringement claims, which had been narrowed by other rulings.
L'Oreal's attorney Stephen Kinnaird of Paul Hastings and Olaplex's attorney Sandy Weisburst of Quinn Emanuel Urquhart & Sullivan both declined to comment on the ruling.
Olaplex LLC and Liqwd Inc sued Clichy, France-based L'Oreal in 2017 for, among other things, allegedly infringing two patents and misappropriating trade secrets related to Olaplex's methods of bleaching hair that cause less hair damage, after meeting with Olaplex about possibly acquiring the company.
A jury ruled for Olaplex and Liqwd in 2019 and awarded them nearly $100 million, and U.S. District Court Judge Joseph Bataillon reduced the award to $50 million in damages, $13.5 million in attorneys' fees, and $2.7 million in interest in March 2020.
Olaplex Inc was later substituted for Liqwd after Liqwd assigned its patent interests to the company.
L'Oreal argued on appeal that none of the information at issue was entitled to trade-secret protection, and Taranto agreed.
Olaplex's alleged secrets included information from an unpublished patent application, business information, "testing and know how," and "trials and errors," Taranto wrote in Thursday's non-precedential opinion.
Joined by Circuit Judges Timothy Dyk and Jimmie Reyna, Taranto first found the information from Olaplex's patent application -- related to the use of maleic acid during bleaching -- wasn't secret because the information was already publicly available at the time in earlier patents and published patent applications.
L'Oreal didn't misuse Olaplex's business information because their non-disclosure agreement allowed L'Oreal to use it to determine whether buying Olaplex or launching competing products would be more cost-effective.
And Olaplex "never identifies with specificity any particular information about testing, know-how, dead ends, or trial-and-error processes and evidence showing that L'Oreal made use of that information, let alone evidence of why that use was improper," Taranto said.
Olaplex's lack of specificity also cast doubt on whether this information was even a trade secret, Taranto said.
Taranto also ordered a new patent infringement trial on parts of one of Olaplex's patents, based on a related March decision by Dyk finding fact issues still existed as to whether L'Oreal infringed. Bataillon had awarded Olaplex summary judgment on infringement.
He also rejected L'Oreal's post-trial patent validity challenges because it failed to raise the arguments during review of the patent by the Patent Trial and Appeal Board.
The case is Olaplex Inc. v. L'Oreal USA Inc., U.S. Court of Appeals for the Federal Circuit, No. 20-1382.
For Olaplex: Sandy Weisburst of Quinn Emanuel Urquhart & Sullivan
For L'Oreal: Stephen Kinnaird of Paul Hastings, Katherine Frenck Murray of Browne George Ross O'Brien Annaguey & Ellis
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