Estée Lauder has accused Walmart of selling counterfeit beauty goods on its website in a lawsuit filed in California federal court earlier this week that name-checks celebrities including Taylor Swift and Beyoncé.
The New York-based beauty giant is taking the big-box retailer to court on grounds of trademark infringement after purchasing, inspecting, and testing products, and determining that they weren’t actually made by its eponymous brand, along with others that it owns: Le Labo, La Mer, Clinique, Aveda, and Tom Ford.
The lawyers for Estée Lauder didn’t hold back, shaming Walmart for its business practices.
“The conduct herein complained of was extreme, outrageous, fraudulent, and was inflicted on plaintiffs in reckless disregard of plaintiffs’ rights,” the lawsuit reads. “Said conduct was despicable and harmful to plaintiffs and, as such, supports an award of exemplary and punitive damages in an amount sufficient to punish and make an example of defendants and to deter them from similar such conduct in the future.”
The lawsuit goes into detail about the specific products owned by brands under the Estée Lauder umbrella that it deemed counterfeit, including a fragrance from the Le Labo brand, La Mer moisturizer, Clinique eye cream, an Aveda hair brush, and several Tom Ford fragrances.
Searches on Walmart.com still generate results for the products that the lawsuit claims are “identical, substantially indistinguishable, or confusingly similar” to the trademarks for the Estée Lauder-owned brands.
A 1-ounce jar of Crème de la Mer moisturizer that retails on La Mer’s website for $200, for example, is still available for purchase on Walmart’s website for as little as $146.35—although reviewers for similar products have raised the possibility that they’re counterfeits.
“ZERO TOLERANCE”
After the lawsuit dropped, the Bentonville, Arkansas-based retailer initially issued a longer statement to some media outlets, including CNBC, that mentioned it doesn’t tolerate “bad actors” on its platform.
However, it later shortened the statement to the following, which it issued to Fast Company: “We are aware of the complaint and have zero tolerance for counterfeit products. We will respond appropriately with the court when we are served.”
In September, CNBC published a lengthy investigation about how Walmart’s embrace of third-party sellers on its online marketplace resulted in its seller and product vetting becoming more lax over time, resulting in products later confirmed to be counterfeit.
ESTÉE LAUDER ALSO UNDER FIRE
Estée Lauder hasn’t exactly been immune to criticism lately.
A grassroots effort emerged on social media last month urging people to boycott Estée Lauder products. That came after The Guardian reported in detail last month that President Donald Trump was keen for the U.S. to acquire Greenland on the urging of a longtime associate, Ronald Lauder, heir to the founder of the beauty brand’s namesake.
One such post on the r/MakeupAddiction subreddit that urges people to boycott the company’s many brands has received 7,100 upvotes and more than 650 comments.
Estée Lauder didn’t immediately respond to a request from Fast Company for a comment regarding the lawsuit nor the calls for a boycott of its brands.
ROSE PRICK VS. PICKY ROSE
In the case of the Tom Ford fragrances, the lawsuit identified “copycat versions” of five private-blend products that it said are “very likely to cause confusion for consumers,” given the similar-looking bottles and names to the originals.
Instead of Tom Ford’s “Rose Prick” fragrance, for example, shoppers on Walmart.com can snag a bottle of “Picky Rose.” Another fragrance cited is “Intense Peach,” which is alleged to be a knockoff of Tom Ford’s “Bitter Peach” fragrance.
The knockoffs are still available for purchase on Walmart’s website—and for a fraction of the price. For example, Tom Ford sells a 50-milliliter bottle of its Rose Prick fragrance for $405. A larger, 80-milliliter bottle of Picky Rose is available on Walmart.com for $21.34.
CELEBRITY FACTOR
The Blakely Law Group, which is representing Estée Lauder, specializes in intellectual property law and has previously represented a variety of plaintiffs, including Paris Hilton, who reached an undisclosed settlement with Hallmark in 2010 after the greeting card company used her “That’s hot” catchphrase.
In the lawsuit against Walmart, the lawyers mentioned the celebrity factor for only one of its brands. The suit cites Taylor Swift, Beyoncé, Joe Jonas, Sophie Turner, and Gracie Abrams as examples of a “myriad” of celebrities who wear Le Labo fragrances, while noting that Beyoncé was shown burning two Le Labo candles in her 2016 visual album, Lemonade.
The lawsuit doesn’t appear to be a factor for investors at this point. Shares of Walmart have risen more than 1% since last Friday’s close as of midday Thursday, while shares of Estée Lauder have surged nearly 9% during that time.