A beauty tech startup that once pitched itself as Estée Lauder’s path into data-driven retail is now accusing the cosmetics giant of stealing its trade secrets and using them to build billion-dollar programs. In a newly-filed complaint, NOMI Beauty, Inc. accuses Estée Lauder Companies, Inc. of trade secret misappropriation, breach of contract, unfair competition, and unjust enrichment, arising out of a relationship that it says allowed Estée Lauder access to its proprietary technology under strict confidentiality obligations.
According to the complaint that it filed in New York federal court on January 16, NOMI is an early-stage beauty technology company that developed proprietary systems for collecting and leveraging zero- and first-party consumer data in the cosmetics industry, particularly through luxury hotels, pop-up activations, and travel retail environments. NOMI alleges that these systems allowed it to build detailed consumer profiles and operate what it describes as an “omni-channel” model spanning in-room hotel retail, stylist appointments, pop-ups, duty-free locations, and digital platforms.
From Acquisition Talks to Alleged Misappropriation
NOMI claims that Estée Lauder first engaged with it in 2018 in furtherance of potential acquisition discussions. The parties entered into a confidentiality agreement that, according to NOMI, restricted Estée Lauder’s use of NOMI’s confidential information to evaluating a possible transaction. NOMI alleges that over the course of several years, it disclosed detailed information regarding its system architecture, consumer data collection methods, travel retail strategies, and payment-sharing functionality to Estée Lauder in reliance on those confidentiality obligations.
After their acquisition discussions failed to culminate in a deal, the parties entered into a supply agreement in 2020 that enabled NOMI to distribute Estée Lauder products through hotel retail programs. NOMI maintains that this agreement also contained broad confidentiality provisions, including language stating that unauthorized use of its confidential information would constitute unfair competition.
The problem, according to NOMI, is that despite those contractual restrictions, Estée Lauder began using its trade secret-protected business strategies outside the scope of the parties’ relationship in 2021. Estée Lauder deployed substantially similar consumer profiling, omni-channel retail, and data-collection initiatives in markets, including China and the United Kingdom, without NOMI’s authorization and without compensation, the company maintains.
In particular, NOMI claims that Estée Lauder launched programs in China that mirrored its travel retail strategy, including duty-free pop-ups, consumer profile modeling, and group-based purchasing features. It further alleges that Estée Lauder introduced a program referred to as “Social Circle,” including a “Duty Free Social Circle” in China, which it says closely resembles its own “Social Share” and “exploratory cart” concepts, designed to allow coordinated shopping and split payments among groups of consumers.
In addition to trade secret misappropriation, NOMI alleges that Estée Lauder breached their 2020 supply agreement by failing to provide exclusive product kits that NOMI had designed for hotel guests and by selling the same products through competing channels. NOMI claims that this conduct undermined its hotel partnerships and violated Estée Lauder’s contractual commitments.
NOMI says that Estée Lauder’s actions caused it to suffer substantial damages and “effectively put [it] out of business.” NOMI claims that Estée Lauder generated “literally billions” of dollars in revenue by using the disputed trade secrets and proprietary information. Against that background, NOMI is seeking damages, as well as injunctive relief to bar Estée Lauder from further use of its alleged trade secrets and confidential information, including in connection with the Social Circle program in China and virtual consultation and consumer profiling initiatives in the United Kingdom.
THE BOTTOM LINE: The case highlights the legal and commercial tensions that can arise when large consumer brands look to smaller technology companies for innovation in data, personalization, and alternative retail channels. At issue is not only whether Estée Lauder misused NOMI’s alleged trade secrets (and more fundamentally, whether the information at issue amounts to trade secrets), but also whether confidentiality agreements meaningfully protect startups when acquisition talks and strategic collaborations fail to materialize.
The case is NOMI Beauty, Inc. v. The Estée Lauder Cos., Inc., 1:26-cv-00452 (S.D.N.Y.).
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