The Trade Secrets Blog

Following Trade Secrets Litigation

It’ll All Come Out in the Wash? – Kate Hudson Sued

This news may be a little old but it is worth posting as I am going to be following the progress of this case closely. You can find a link to the information here.

Actress Kate Hudson and ceebrity stylist David Babaii have been sued by 220 Laboratories Inc. in Los Angeles Superior Court over allegations that Hudson and Babaii misappropriated trade secret information relating to the ingredients of hair-care products (specifically Volcano Ash).

Key graph:

“220 Laboratories says it was the only supplier of volcanic ash in the USA and that it entered an “oral contract” with the Tinseltown twosome in August 2006 to develop and manufacture hair products. The company says it revealed their “confidential” ingredient list to Hudson and Babaii in November, and that the duo then took the ash samples and shopped around to find a cheaper deal.”

If the allegations are true and 220’s ingredients list can be categorized as trade secrets (i.e., not generally known to the public, and the subject of efforts to maintain the secrecy of the ingredient list) then 220 may have a pretty good case depending on how it is that Hudson and Babaii came into contact with the ingredient list. In other words, if they signed a confidentiality agreement that specifically stated ingredient lists as the subject of the confidential communication, then 220 stands a very good chance of prevailing. However, the use of the “oral contract” language makes me believe that there is no confidentiality agreement, just an agreement to do business together (which may be a separate claim, but not a trade secret misappropriation claim). If so, it will be interesting to see how 220 will claim that information for which they did not even go to the simple step of having a confidentiality agreement signed before disclosing can be classified as a trade secret.

In any event, if 220 is merely relying on an oral contract to do business together as a basis for their trade secret misappropriation lawsuit, then we can learn a few lessons here: (1) get any contract in writing before you place any reliance on the agreement; (2) before disclosing any sensitive information, get a confidentiality agreement. Had these two steps been followed by 220, their case would, most likely, be much stronger. I cannot stress this enough–use Confidentiality Agreements when disclosing sensitive information.

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September 8, 2008 - Posted by | confidentiality agreement, Intellectual Property, misappropriation, trade secret theft, Trade Secrets | , , ,

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