Global cosmetics behemoth Estee Lauder is facing a substantial legal challenge from a small technology startup that claims the corporation stole its innovative ideas and effectively forced it out of business. The lawsuit, formally filed in federal court in New York, originates from a company named Nomi Beauty, which asserts it developed proprietary technology designed to help beauty brands comprehend what customers genuinely desire to purchase, with a particular focus on travellers staying in hotels.
Startup's 'Secret Sauce' Technology
Nomi Beauty, pronounced "know me," states it created tools it described as its "secret sauce," specifically engineered to assist Estee Lauder in selling more products through luxury hotels, duty-free shops, and in-room services. This strategic approach aimed to reduce the corporation's reliance on traditional brick-and-mortar retail stores, potentially opening lucrative new revenue streams in the hospitality and travel sectors.
Allegations of Contract Termination and Idea Appropriation
According to the detailed legal filing, Estee Lauder, the parent company of prominent brands including Clinique and MAC, terminated its contracts with Nomi in 2018 and 2020. Subsequently, the startup alleges, the cosmetics giant utilised Nomi's confidential ideas to launch its own new sales programmes in several countries, including China, Costa Rica, Malaysia, the United Kingdom, and the United States.
The lawsuit contends that these newly established programmes were constructed upon the same confidential information Nomi had shared with Estee Lauder during their former partnership. Furthermore, Nomi claims that Estee Lauder deliberately cut off supplies to hotels that were collaborating with the startup, thereby making it impossible for the smaller company to continue its operations.
Significant Revenue and Business Destruction Claims
The legal document argues that Estee Lauder has earned considerable new revenue from the technology originally developed by Nomi Beauty. This behaviour, the startup asserts, effectively destroyed its business, leaving it unable to compete or sustain operations after its innovations were allegedly co-opted by the much larger corporation.
As reported by Reuters, Nomi is seeking "unspecified compensatory, punitive and triple damages" through the legal proceedings. Legal representatives for Nomi told the news agency, "Nomi's stolen innovations brought Estee Lauder into the information age, and Estee Lauder continues to profit from them wildly."
Corporate Context and Financial Challenges
This lawsuit emerges just one year after Estee Lauder announced plans to cut as many as 7,000 jobs worldwide as part of a comprehensive cost-saving overhaul. Details of the group's cost-cutting measures surfaced as it revealed a substantial $590 million loss at the conclusion of its second quarter in December 2024.
At that time, the company attributed these financial difficulties to weak demand for cosmetics at airports and subdued consumer spending in key markets such as Korea and China. The Independent has reached out to both Estee Lauder and Nomi Beauty for comment regarding the ongoing legal dispute.
