Cosmetics Archives - Page 4 of 14

As the $500 Billion-Plus Cosmetics Market Continues to Grow, How Do Companies Set Themselves Apart?

July 28, 2020 - By TFL

The skincare market is growing increasingly more competitive, particularly in recent years as certain demographics, such as Gen Z and millennials, prioritize wellness, clean beauty, and the adoption of more proactive skincare regimens (complete with buzzy ingredients, such as niacinamide, hyaluronic acid, and various different vitamins) over traditional makeup and beauty products. One need not look further than Glossier, the millennial-favored unicorn beauty brand – whose motto is “skin first, makeup second” – to see this sizable shift in practice.

Against this background, well-established cosmetics giants and burgeoning new companies, including many direct-to-consumer startups, are busy creating and/or adapting to new trends to cater to consumers and their changing tastes in the $507 billion global cosmetics market. While the value of the market as a whole comes from a number of different segments and product categories (skincare, for instance, is estimated to be worth nearly $135 billion as of 2018), a relatively small handful of rival companies – including L’Oréal, Johnson and Johnson, Shiseido, Estée Lauder Companies, Unilever, Coty, and Procter & Gamble, which collectively own more than 200 of the most recognized beauty brands in the world – have traditionally been responsible for the majority of the revenue in this space.

The seemingly endless array of heavily-marketed products, the emergence of a pool of powerful indie brands, the explosion of billion dollar M&A deals, and the sheer level of cosmetics sales being generated on an annual basis (largely by the same handful of companies) shed light on just how competitive it can be for companies in this market.

“In order to maintain a position in the industry, companies – whether they are new, rising or established – benefit significantly from their arsenals of intellectual property rights,” according to Dilworth IP’s Shin Hee Lee and Anthony Sabatelli. What exactly are they referring to? Everything from trademark-protected brand names and logos (and even product packaging and colors in the case of Glossier) to patented – and maybe trade secret-protected – formulas for the products, themselves. These things are at the heart of what enables companies to distinguish themselves and their products from rival companies in a crowded market, and so, it makes sense why companies are looking to claim exclusive intellectual property rights in them.

There is obvious inventive for brands to establish trademark-protected brand names, logos, and product packaging (the latter of which continues to prove important in the beauty and the direct-to-consumer spaces) when it comes to consumer goods. After all, strong trademark rights and the relevant goodwill that goes along with them enables consumers to distinguish among – and prioritize – certain companies’ products over those of others. As of June 2018, trademark filings for cosmetics (i.e., those in Class 3) were on the rise, with giants like L’Oréal among the top trademark-filing parties in the world; L’Oréal filed a total of 189 international trademark applications in 2019, for example, up from 169 a year earlier.

Patents in Particular

L’Oréal’s filings also indicate another core area of importance for brands in the cosmetics/beauty space: patent protection. Looking beyond trademarks, companies, such as L’Oréal, are also relying heavily on patent protection to bolster their offerings. The French company revealed in its 2019 annual report that it registered 497 patent over the course of the year. That figure is just down from 505 patents registered in its name in 2018.

Lee and Sabatelli concur, saying that there “is currently an overwhelming number of [cosmetics-related] patents” being filed by companies and granted by the U.S. Patent and Trademark Office. Unsurprisingly, given the growing demand over makeup goods, skincare-related products “are among some of the most heavily sought out” when it comes to patents, as the majority of these products consist of “unique compositions of known or novel ingredients” that neatly fall within the bounds of a utility patent. (Utility patents protect any novel, non-obvious, and useful machine, article of manufacture, composition of matter or process, while design patents essentially protect the way a product looks).

In addition to products with a pure anti-aging focus, which are regularly the subject of patent protection, the relatively recent rise of clean beauty products has prompted new brands to enter into the market and seek protection for their products. It has also pushed existing brands to reformulate their products, and file patents for new, plant-based components.

At the same time, another area of “intense patent activity” in this arena has come hand-in-hand with the rise of cosmetic devices, with these products being “increasingly commercialized and patented” (both on the basis of how they look and how they work), according to Lee and Sabatelli, as companies look to enable consumers to bring such technologies into their daily skincare routines. “One of the pioneers that popularized hand-held devices” is, of course, Pacific Biosciences Laboratories (“PBL”), which is better known as Clarisonic. The company, which was acquired by L’Oréal in 2011 and revealed this month that it will shutter, is famous for its iconic cleansing tool that consists of a mechanically rotating face brush that oscillates back and forth over the skin, enabling users to clean and exfoliate.

As of 2018, Clarisonic maintained some 40 patents (and alleged trade dress protections, as well) for its various devices, enabling PBL to successfully file suits against copycats across the globe, including in the U.S. In 2012, for example, a federal jury in Seattle sided with PBL and awarded it nearly $12 million in damages in the case that it filed against Nutra Luxe MD for allegedly selling infringing versions of its acne-specific cleansing brush. Meanwhile, in 2017, the International Trade Commission issued a General Exclusion Order in PBL’s favor, thereby prohibiting “all imports, sale for importation, or sale within the United States after importation of electric skin care devices, brush heads, or kits” that infringe a couple of PBL’s patents.

While Clarisonic may be shuttering, the global beauty devices market still represents a $74 billion-plus opportunity, according to CB Insights’ Industry Analyst Consensus – from “standalone apps and devices,” such as LED masks and microcurrent facial tools, to the “connected beauty systems” that brands are building in order “to personalize skincare treatments, gather behavioral data on shoppers, and encourage loyalty within brand-powered skincare ecosystems,” and it is a magnet for patent protection. Neutrogena, for instance, sells a “small, portable stick that treats acne using phototherapy,” while Southern California-based LightStim’s LED gadget “emits UV-free, beneficial light energy to the skin” to reduce wrinkles, redness, and/or acne depending on the color of the light. Both of those products are protected by patents.

Due to the often-extensive research and development required to develop complex cosmetics products (whether they are devices or proprietary anti-aging formulas), the companies selling them often seek out patent protection in order to give themselves a period of exclusivity – generally 15 and 20 years, respectively for utility and design patents – during which time they will ideally recoup some of the costs associated with the intensive research and development that goes into designing and manufacturing the products.

Lee and Sabatelli expect that skincare patents, including design patents in the swiftly growing devices segment, will “continue to increase in the coming years.” This is almost certainly to be the case as consumers potentially look to avoid post-COVID-19 beauty appointments in favor of using new technologies in their own homes, and as companies race to innovate (and protect their innovations) in order to win over consumers in new ways and to stand out in this ever-burgeoning market.

Law

As Cosmetics Sales in Continue to Grow, China Revamps its 30-Year Old Regulations

July 20, 2020 - By TFL

China has overhauled a 30-year old law governing beauty products and cosmetics, as the market for these goods continues to surge each year. To give some perspective to that growth: retail sales of cosmetics in China – from native Chinese companies to the cosmetics divisions of Western luxury goods purveyors, skincare companies, and big-names in beauty goods – increased by approximately RMB 40 billion ($5.72 billion) between 2018 and 2019, alone, valuing the market at a whopping RMB 300 billion ($42.91 billion) or more as of last year. Such growth has not escaped the attention of regulators, who released the new Cosmetics Regulation on June 16, 2020.

Taking effect on January 1, 2021, the new regulation makes a large number of changes to the previously existing law – from the inclusion of e-commerce-specific updates to addressing how the process of gaining approval for new ingredients will be handled, all of which place an emphasis on compliance throughout the entire life cycle of individual cosmetics and beauty products, and increases responsibilities of cosmetic license holders to ensure product safety and quality for the ultimate benefit of Chinese consumers.

A few of the key elements of the regulation (for native Chinese and international companies, alike) are highlighted below …

Enhanced Compliance Obligations for License Holders

The soon-to-be-implemented regulation places significant requirements on cosmetic license holders, making them responsible for compliance obligations related to the cosmetic products they make and sell. For instance, cosmetic license holders are required to establish a quality assurance system and an adverse event monitoring and evaluation system to ensure quality and safety of their products throughout the product lifecycle.

Companies are also responsible for designating individuals within their ranks to specifically manage quality control and the distribution of products, and are required to publish evidence and reference documents on a government-designated website to substantiate and support claims they make about the functionality of their cosmetic products.

For foreign license holders, the law requires that they designate a Chinese legal entity to handle the regulatory matters for them in China in relation to product registration or notification, as well as adverse event monitoring and recall reporting.

Stimulation of Innovation for New Ingredients

Under the current regulation, all new cosmetic ingredients are subject to a lengthy approval process. On the contrary, the new regulation requires only certain high-risk new ingredients (e.g., preservatives, sunscreen ingredients, colorants, hair dyes and whitening agents) to be approved by the regulatory authority. Applicants of other unlisted new ingredients only need to go through a simplified notification process.

The new regulation implements a three-year monitoring period for newly approved or notified ingredients. After the expiration of the three-year period, the relevant new ingredient can be listed in the Catalogue for Ingredients in Use, assuming a safety concern did not arise.

New Rules for E-commerce Platforms

Online sales of cosmetic products are booming in recent years, which is why the new regulation includes specific e-commerce language, something that the regulation did not have prior to the recent overhaul. According to the new regulation, e-commerce operators should (i) record and verify the identity of cosmetic distributors or retailers that trade on their e-platforms; (ii) require that these distributors or retailers refrain from conducting any acts that would violate the regulation; (iii) report misconduct to the supervising authority; and (iv) suspend a distributor’s or retailer’s ability to engage in c-commerce services in connection with serious non-compliance. The new regulation also requires that cosmetics distributors and retailers to accurately disclose all the required information of cosmetic products that they trade on e-commerce platforms.

Outstanding Questions under the New Regulation

The new regulation redefines “special cosmetics” – i.e., ones that are subject to special or heightened regulations – as cosmetics used for hair dye, perm, skin whitening, sunscreen, anti-hair loss, and cosmetics with new functional claims. The regulations specifies what types of products fall within this realm to a certain extent. However, the scope of “cosmetics with new functional claims” awaits further interpretation by the regulatory authority.

Impacts of the New Regulation

The new regulation’s emphasis on innovation and compliance may reshape the landscape of cosmetics industry. The shortened time to market of new ingredients brings opportunities to innovative cosmetic market players, while the increased responsibilities of cosmetic license holders and severe consequences for non-compliance will likely force cosmetic companies to improve their quality management system and perform their obligations more diligently through the product lifecycle.

Should companies fail to abide by the terms of the regulation, penalties can be levied upon foreign cosmetic license holders, as well as their Chinese designees. If foreign cosmetic license holders refuse to accept the penalties, their products could be banned from importation for up to 10 years. Meanwhile, if the Chinese designees fail to assist foreign cosmetic license holders in adverse event monitoring/reporting and product recalls, they may be subject to penalties such as corrective actions, fines up to RMB 0.5 million, or five-year prohibition from engaging in cosmetic businesses.

Finally, the new regulation significantly increases administrative penalties for a variety of violations. for example, it imposes penalties of up to 15 to 30 times the illegal gains, a sharp uptick from 3-5 times the illegal gains under the current regulation. Moreover, the new regulation imposes personal liability on responsible corporate officers of an entity that violates the New Regulation. Such officers would be subject to fines up to five times his/her annual income from the non-compliant entity and lifetime debarment in serious cases.

Katherine Wang is a partner in Ropes & Gray’s life sciences group. (Edits/additions courtesy of TFL)

Law Intellectual Property

Steven Klein, Nars Prevail in Copyright Case After Allegedly Hijacking Photo of Makeup Design for Collab

July 6, 2020 - By TFL

Steven Klein and Francoise Nars have prevailed in a case filed against them by makeup artist Sammy Mourabit. According to the copyright infringement suit filed in a New York state court in August 2018, Mourabit claimed that the famed fashion photographer and the makeup mogul used his work that appeared in a 2013 editorial in W magazine starring actress Juliette Lewis for the packaging and promotion of a collection with Nars without his permission, in furtherance of what Mourabit called “blatant and mendacious deception of the public and theft.”

Known for his work with Rihanna, Katy Perry, Madonna, Britney Spears, major magazines like Vogue and Harper’s Bazaar, and designers such as Rick Owens, Mourabit asserted in his complaint that Steven Klein and Francoise Nars “launched a line of makeup named after themselves.” The problem with that, according to Mourabit: the packaging and promotional materials for the collection made use of his work – namely, an image from the 2013 photo shoot – “without compensating him or giving him credit for his work.” Instead, of doing that, he claims Klein and Nars “fraudulently” presented the makeup designs as their own.

While Klein, as the photographer of the image, has exclusive rights in it in accordance with copyright law, Mourabit claimed that he also has rights in the photo, since he was responsible for the makeup design depicted in it. In his copyright infringement complaint, Mourabit pointed to a federal registration for a drawing of the makeup design that Lewis showcases in the photo – which depicts the actress with a glitter-covered face, bold eyebrows, and bold red glittered lips – as evidence of his rights in the image.

Following a back-and-forth between the parties (including Nars owner Shiseido), and a removal of the case from state court to federal court, Mourabit voluntarily dropped his copyright infringement claim in connection with the drawing of the makeup design. Thereafter, in a July 2019 decision, the U.S. District Court for the Southern District of New York granted the defendants’ motion to dismiss and tossed out the rest of Mourabit’s claims – state law claims of unjust enrichment, unfair competition, and violation of New York General Business Law – on that basis that they “fell within the preemptive scope of the Copyright Act.”

According to the court, makeup artistry is a type of work that fits into the “pictorial, graphic and sculptural works” category of copyrightable works (and can be “fixed in a tangible medium of expression”). Moreover, because the rights (and remedies) that Mourabit was seeking in connection with his state law claims are equivalent to those provided by the Copyright Act, the state law causes of action are already covered by – and thus, are preempted by – his federal copyright infringement claim, which Mourabit had agreed to voluntarily dismiss.

On appeal to the Court of Appeals for the Second Circuit, Mourabit argued that his state law causes of action should not be preempted (and thus, tossed out). In furtherance of his argument, Mourabit walked back on his copyright claim, and instead, asserted that his makeup design work that appeared in the W Magazine photoshoot actually does did not meet the requirements for copyright protection to apply. To be exact, Mourabit argued that makeup artistry does not fall within any of the categories of copyrightable works set forth in the Copyright Act. Beyond that, he claimed that his makeup design, which appeared in the magazine editorial, “was not fixed in a tangible medium of expression,” which is a core prerequisite for copyright protection.

In a decision last month, the Second Circuit disagreed with Mourabit on both counts. For one thing, the 3-judge panel for the court held that it does not necessary matter if Mourabit’s makeup artistry falls within any of the categories of protectable subject matter, as the scope of copyright preemption is “broader than the scope of copyrightable materials.” In order for Mourabit’s state law claims to be preempted by the Copyright Act, the court held that his makeup artistry only needs to fit into one of the those categories “in a broad sense,” which it does “because it is essentially a painting that is displayed on a person’s face,” and paintings clearly fall within the scope of copyright subject matter.

The court concluded that Mourabit’s makeup design work “shares enough features with the category of pictorial, graphic, and sculptural works to fall within the ‘broad ambit’ of section 102(a) [of the Copyright Act] and, therefore, to be potentially subject to copyright preemption.”

As for the fixation argument, in furtherance of which Mourabit asserted that human skin cannot qualify as “a tangible medium of expression,” and even if it did, the makeup that he designed and applied to Lewis’s face was not sufficiently permanent, the court held that since the makeup design was fixed in the photograph taken by Klein, there was no need to consider the merit of Mourabit’s two claims. “Although Klein, not Mourabit, took the photograph, that fact is of no import here because a work of authorship may be fixed ‘by or under the authority of the author,’” the court held, as “Mourabit plainly consented to the photographing of his work by Klein: after all, creating such a photograph was the goal of the photo shoot.” As such, “the fixation of his makeup artistry in the photograph occurred under Mourabit’s authority.”

With the foregoing in mind, the court held the district court had properly dismissed Mourabit’s unjust enrichment and unfair competition/misappropriation claims as preempted, thereby, bringing the case to a close.

As Mintz’s Susan Neuberger Weller and Paul Brockland state in connection with the Second Circuit’s decision, the question of whether human skin can be the kind of “tangible medium of expression” required for copyright protection remains unanswered. “The closest thing to case law on the issue,” they note, “is a 2011 preliminary injunction ruling from a federal judge that said the tattoo artist behind former professional boxer Mike Tyson’s famous face tattoo could likely win a copyright case against the producers of ‘The Hangover 2’ for stamping the same design on actor Ed Helms’ face for the film, but the case settled prior to an actual ruling.”

For makeup artists who wish to amass copyright rights in their designs, Weller and Brockland encourage them to “create a drawing of the makeup design on paper prior to applying the makeup to a human, and to take a photograph of the design once applied to human skin.” They can then file for copyright registrations based on such drawings or photographs.

*The case is Sammy Mourabit v. Steven Klein, 19-2142-cv (2d Cir).

Law

After Filing Suit Against KKW, Seed Beauty is Taking on Kylie Cosmetics, Coty in New Trade Secret Lawsuit

July 1, 2020 - By TFL

On the heels of alluding to impending litigation involving Kylie Cosmetics in the trade dress secret case it filed against Kim Kardashian’s KKW Beauty late last month, Seed Beauty has named Coty, Inc. and Kylie Jenner’s corporate entity King Kylie LLC in a markedly similar lawsuit. In the newly-initiated legal battle, beauty brand incubator Seed Beauty is seeking judicial intervention to put a stop to Coty’s alleged “theft of [its] pioneering and proprietary digital-first business model that has revolutionized the cosmetics industry,” which it is carrying out via its billion-dollar deals with members of reality television’s most famous family.

According to the heavily-redacted complaint that it filed in a California state court on Tuesday, Southern California-based Seed Beauty alleges that as a result of Coty’s inability to “successfully compete in the new digital cosmetics world through its own innovation,” the legacy beauty conglomerate has enacted a plan “to steal the secret sauce behind Seed,” and has actually “gained unlawful access to Seed’s proprietary strategies for developing and growing cosmetics brands” by way of its recently-hatched deals with Kylie Cosmetics and KKW.

Coty first made headlines in connection with the buzzy Kardashian/Jenner brands in November 2019 when it acquired a 51 percent stake in Kylie Jenner’s Kylie Cosmetics – which was developed in partnership with Seed in 2014 – for a whopping $600 million. Then, late last month, the American multinational beauty company revealed that would take a 20 percent ownership interest in Jenner’s half-sister Kim Kardashian’s KKW Beauty brand, whose products are similarly created and produced by Seed, for $200 million.

The issue at play in connection with both of those deals, according to Seed’s complaint: As the party tasked with “formulating, making, packaging, and shipping all of Kylie’s products,” as well as those of KKW Beauty, Seed is the owner of an array of proprietary and confidential information that is essential to the working of its “unique business model.” However, while it maintains exclusive rights in such information, Seed claims that because both Kylie Cosmetics and KKW have had access to some of the most valuable and secretive elements of its business, that information is at risk of misappropriation in light of their deals with Coty.

Proprietary, Confidential Information

According to Seed’s new lawsuit, the specific, protectable elements of its business – which are redacted in the publicly-accessible version of the complaint – are “not generally known in the beauty industry and could not be learned by others, if at all, without considerable expenditure of time, effort, or expenses.” As such, this information amounts to trade secret info., a type of intellectual property that covers information used in business that gives a company an advantage over competitors who do not know or use it.

These trade secrets – which Kylie Cosmetics and KKW allegedly had access to as a result of their close ties to Seed – are “essential to Seed Beauty’s competitive position in the beauty and cosmetics industry,” the complaint claims. That is why Seed says that it requires its exclusive beauty brand and cosmetic partners to sign off on and abide by “strict confidentiality and non-disclosure obligations.”

In light of Coty’s recent deals with Kylie Cosmetics and KKW, Seed claims that this valuable information is at risk of misappropriation by Coty. Seed asserts that the risk of misappropriation is particularly high due to Coty’s alleged desire to copy its unique business model for its own benefit, and the company’s willingness to “cross the legal line when it decided to rebuild itself by stealing every aspect of Seed’s pioneering business model” by way of the aforementioned acquisitions.

Kylie Cosmetics’ alleged “refusal to confirm or deny whether it [has] disclosed the Seed Beauty trade secrets or any confidential details to Coty” appears to serve as part of the impetus for Seed’s suit. More than that, though, Seed asserts that Coty’s recent acquisition of a stake in KKW, which resulted in KKW “disclosing [trade secret information] to Coty, without Seed’s consent,” has led it to believe that “similar improper use and disclosure of information was made by [Kylie Cosmetics] to Coty.”

“Recognizing the imminent threat of harm Seed was likely to sustain without injunctive relief,” the same California state court granted Seed’s request for a temporary restraining order in the case that the company filed against KKW late last month. As a result, KKW “and all those acting in concert with it [are legally prohibited] from directly or indirectly disclosing, misappropriating, or facilitating the disclosure or misappropriation of, or sharing in any way any details related to the Seed-KKW Beauty business relationship or arrangement with Coty.”

With its preliminary win in the KKW case in hand, Seed wants the same remedy in connection with King Kylie and Coty.

Setting forth claims of misappropriation of trade secrets in violation of California Uniform Trade Secret Act, breach of contract (against King Kylie), and intentional interference with contract (against Coty), Seed is seeking “a temporary restraining order and preliminary and permanent injunction enjoining Coty from, among other activity, reviewing, discussing, disclosing or misappropriating [its] trade secret” information, as well as monetary damages.

Misappropriation by Acquisition

As we noted in connection with Seed’s case against KKW Beauty, this case similarly presents an important look at how trade secret information becomes an issue in the context of acquisitions. While traditionally under-discussed, trade secret misappropriation by acquisition has received increased attention in recent years in light of headline-making matters, such as the since-settled lawsuit between Alphabet’s Waymo and Uber, a case that centered on Uber’s acquisition of self-driving startup Ottomotto.

It also comes as part of a larger movement that includes a growing amount of trade secret litigation. As global advisory firm Stout noted in a recent report, while companies have relied on trade secret causes of action to protect valuable business assets for decades, “Legal action has expanded over the years and recent trends have set the foundation for a continuing surge in federal trade secret litigation.” As a result of “the digitization of intellectual property and ongoing competition across industries,” as well as an increase in M&A discussions in light of a larger trend towards consolidation, among other macro developments, companies are at elevated risk of trade secret theft, and no small number are responding to such threats and instances of misappropriation by “increasingly engaging in legal proceedings specific to trade secrets.”

The case at hand, as well as the case that Seed filed against KKW Beauty, follows from an ongoing trade secret case involving L’Oreal, in which haircare startup Olaplex accused the personal care titan of stealing an array of its trade secrets in connection with acquisition discussions between the two companies. In something of a similar case, fashion rental company Le Tote is currently suing Urban Outfitters for allegedly stealing its trade secret-protected business model in order to create a rival company under the alleged guise of a potential acquisition.

*The case is Seed Beauty LLC and Beta Beauty LLC, v. Coty, Inc., HFC Prestige Products, Inc., King Kylie, LLC, 20VECV00721 (Cal.Sup.).

Fashion Brands and Marketing

L’Oréal-Owned Sites Attract NAD Scrutiny Over Lack of Disclosures

June 30, 2020 - By TFL

Skincare.com is populated by everything a reader could possibly want to know about skincare – from the difference between UVA and UVB rays and how they affect skin to the dermatologist-approved nighttime skincare routine that “you need to try.” In conjunction with a sweeping array of editorial content, the website is jam-packed with recommendations about what products consumers should be using. The same is the case for similar sites, makeup.com and hair.com.

In addition to serving as helpful destinations for those interested in skincare, makeup, and haircare, respectively, the three websites have something else in common: they are all owned by L’Oréal. It is precisely the ownership and operation of the sites by the French personal care titan – whose roster of brands, which includes L’Oreal, Lancome, YSL beauty, Guy Laroche, Maybelline, CeraVe, and Skinceuticals, among many others, generates $33.57 billion in annual revenue – that piqued the interest of the National Advertising Division (“NAD”).

An investigative division of the Better Business Bureau, the NAD took issue with the fact that skincare.com, makeup.com and hair.com look a lot like regular publisher websites (i.e., those in the business of “providing general information on how to improve one’s hair, skin, and makeup application through various articles”), and thus, were not easily identifiable as websites operated by L’Oréal, and that primarily serve to advertise L’Oréal-owned brands and their products.

Against this background, the NAD sent a formal letter to L’Oréal this spring, asserting that the company had “failed to sufficiently disclose [its] connection with the websites in a clear and conspicuous manner [on the websites], in order to ensure that consumers … would reasonably understand that these are L’Oréal-sponsored websites and that articles featuring reviews of various products are advertisements for L’Oréal.”

While L’Oréal included disclosures on its sites, namely, “at the bottom of the webpages,” the NAD found that they did not meet the Federal Trade Commission (“FTC”)’s guidelines, as they were “too far from the website logos and content” for consumers to “easily understand whether the content they are viewing is an advertisement or editorial content,” as consumers “might weigh the recommendations differently if they were aware that the content was written by or on behalf of L’Oréal.”

The NAD revealed in a recent release that L’Oréal immediately responded to its inquiry and explained that “the full L’Oréal branding traditionally appeared at the top of each webpage, integrated with the website name and logo, but that during revisions of the websites, the full disclosure was inadvertently dropped on some pages.” In response to the NAD’s inquiry, L’Oréal has added “By L’Oréal” directly below the makeup.com and skincare.com logos on the respective websites, and “Powered by L’Oréal” directly below the hair.com main title, which the NAD has determined are likely “clear and conspicuous” enough to pass the FTC’s muster, and adequately inform consumers of L’Oréal’s ownership of the websites “such that they understand that the content of the websites may be advertising.”

Far from the only company to make use of editorial websites for the purpose of advertising, L’Oréal’s sites are similar to ones like Spotlyte, for instance, the “aesthetics, beauty and skincare”-centric website. Describing itself as “your new beauty authority, your skincare guru … [that is] obsessed with medical aesthetics,” Spotlyte looks like an average beauty website, complete with robust social media accounts, but in reality, the site is owned by Botox-maker Allergan. By way of the 2-year old site, which made headlines as a “first-in-category digital hub,” Allergan is something of a first-mover in the pharmaceutical space. At the same time, it part of a larger push by pharma companies to make their products (and the advertising of them) more accessible to digitally-connected consumers, whether that come in the form of editorialized sites or endorsements by influencers – including mega-stars like Kim Kardashian – that hawk their products.

Chances are, the stakes will be higher from an enforcement perspective for the likes of Allergan and co., than they are for L’Oréal, purely due to the nature of the products being promoted: skincare and makeup products are likely to be less of a priority for regulators – and self-regulators, like the NAD – than pharmaceuticals, whether they be Botox or morning sickness or psoriasis medications, the latter of which have been promoted on social media by influencers hired by the drug makers.

Nonetheless, the recent NAD action shows that even if skincare or haircare present a less pressing need of careful oversight than medical products, the relevant bodies are still paying attention and willing to take necessary action.