We still await the judge’s order in the case Mary Kay Cosmetics brought against Touch of Pink Cosmetics. The jury made its decisions, which all went against TOP. However, the case is not concluded until the judge actually rules. The judge could decide to throw out some or all of the jury’s decisions. That doesn’t often happen, but there is still hope. Whatever jury decisions are upheld by the judge, TOP would have the opportunity to appeal.
To say I'm stunned that Touch of Pink lost on all issues would be an understatement. The history of the case can be found in articles here. The verdict in the case is here. UPDATE: There is a chance that the judge could go against this jury verdict, and Touch of Pink could still be victorious. (Don't count on it, though. There's little chance it will go that way.)
This is a huge blow to consultants, whether they realize it or not. Mary Kay now has the power to dictate exactly who you may or may not sell your products to. Once you purchase them from Mary Kay, they aren't really yours to do with as you please. Mary Kay can tell you who you can sell to.
This is obviously also a blow to inventory liquidators. Even though Touch of Pink made it clear that they were simply resellers of Mary Kay products, it's now been decided that they were "creating confusion" in the marketplace (Really? By saying "we're not affiliated with MK"?) and that they were "passing off" (Really? By stating that the products they sold were genuine MK products, which they in fact were?).
How sad for Touch of Pink. How sad for consultants. Run for your lives, women. Don't deal with this corrupt and evil company called Mary Kay Cosmetics.
A couple of weeks ago there were some important rulings in the lawsuit Mary Kay Cosmetics brought against Touch of Pink Cosmetics and Amy and Scott Weber. Parts of their case were thrown out of courts, while others will proceed to trial. Touch of Pink filed a motion for summary judgment, which is basically a request for the judge to throw the case out of court. Today we’ll talk a bit about how the judge ruled.
Here is the judge’s opinion in full, for your reading pleasure. (Warning: It’s long!)
In the first part of the opinion, the judge rules on the Webers’ objections to some of the evidence Mary Kay wants to present at trial. One of the issues here is that Mary Kay is alleging that consumers are confused by the Touch of Pink website and think that TOP is affiliated with Mary Kay. This is an interesting issue, because essentially Mary Kay’s position is that if anyone mistakenly assumes TOP is affiliated with MK (despite a clear disclaimer on their “about” page on their website) then TOP is doing something wrong. TOP’s position is that it’s not their fault if consumers are too dumb to read their website and comprehend it.
It seems to me that if Touch of Pink makes it clear they’re not affiliated with Mary Kay, then they shouldn’t be held responsible for ignorant consumers. TOP wanted an email demonstrating the ignorance of one customer thrown out of the case, and the judge denied that argument. The email is going to be presented at trial as evidence, and the judge tips us off to his leaning in Mary Kay’s direction on this whole issue of confusion when he writes:
“The court finds the e-mails are relevant because they tend to show that consumers were confused about touchofpinkcometics.com’s affiliation with Mary Kay.”
One other interesting part of the case is the Webers’ objection to a survey that Mary Kay had done for purposes of this case. Mary Kay hired an expert to survey 303 consumers about whether they believed TOP was “affiliated with” Mary Kay.
The Webers raise a very important point here: They say that the way the survey was conducted ensured unreliable results. Consumers were asked if they thought TOP and MK were “affiliated” without defining what that word meant. Consumers could have been well aware that TOP and MK were two completely separate companies, but since they knew TOP sold MK brand products, may have said they believed the companies were “affiliated.”
The judge ruled that Mary Kay can’t present evidence that 45% of those surveyed believed the companies were affiliated because that figure includes those who thought there was an affiliation simply because TOP sold MK branded products. The jury will only be allowed to hear about the consumers who were “confused” about the affiliation between TOP and MK for other reasons.
Then we get into the real substance….
Touch of Pink says that their sales are protected under “The First Sale Doctrine.” Essentially, they aren’t committing trademark infringement against Mary Kay because they’re allowed to sell Mary Kay products that contain the Mary Kay name.
But there’s a problem, because Mary Kay says the products TOP sells are “materially different” from the products MK sells. Blogger Eric Goldman explains:
From a legal standpoint, the trademark infringement claim looks easy to dispose of. Due to the First Sale doctrine, IBCs and any downstream resellers should be free to resell legitimate goods at whatever price they want; and they should be free to let consumers know of the availability of those goods. However, the First Sale doctrine applies only when the resold goods are not “materially different.” Mary Kay argued that the goods were materially different because “(1) they are expired, (2) they do not carry the same product guarantee, and (3) they are old, used, discontinued, or otherwise defective.” Some of these arguments are questionable (why are discontinued but unmodified goods “materially different”?), but everyone agreed that Weber was reselling expired goods, and with perishable goods this could matter. Not being a cosmetics consumer, I’m not sure how perishable cosmetics are; I suspect some aren’t, even if they are stamped with an expiration date. In any case, the court denies summary judgment, making this a fact question for the jury.
The Webers also assert that their use of the Mary Kay trademark is fair use, because they’re allowed to truthfully identify the products they’re selling with the brand name. (How else would anyone be able to accurately identify the products if they were prohibited from mentioning Mary Kay?)
This one gets interesting. It seems to me that the Webers should easily win on this issue. But the judge disagrees with me. Mary Kay has argued that TOP has done more than “identify the products it sells.” They say that by purchasing Google advertising using “Mary Kay” as a keyword, they’ve gone beyond fair use. The Webers, of course, say that it’s simply a form of advertising and they haven’t done anything with the Google keywords to make consumers think they’re endorsed by or affiliated with Mary Kay Inc.
The judge mentioned the case of Tiffany Inc. suing eBay for trademark infringement because eBay purchased Google advertising linked to the keyword “tiffany.” eBay won that case and the court ruled there that the use of the keyword in the advertising didn’t suggest any affiliation or sponsorship. Rather, the use of the keyword merely identified the products being sold on eBay.
It seems that the judge and I agree up to this point. But the judge goes on to say that although the simple use of a keyword isn’t wrong, the way that the Webers use that keyword “improperly suggests affiliation.”
One Google ad from Touch of Pink Cosmetics read:
Mary Kay Sale 50% Off: Free Shipping on Orders over $100 Get up to 50% Off — Fast Shipping www.touchofpinkcosmetics.com.
This ad was appearing at the top of the list of sponsored links. The judge says that this language “…does imply that Mary Kay is hosting the sale.” And he says that other advertisements for the same keywords do not “…suggest affiliation or sponsorship.”
The judge writes:
The overall message of the defendants’ ad is only that some entity — whose website, it bears noting, includes the word “pink,” a color often associated with Mary Kay — is offering Mary Kay products at 50% off. One could easily conclude from this ad that the entity offering the sale either is Mary Kay, or has Mary Kay’s approval. Thus, the court finds there is a genuine issue of material fact on the applicability of the fair use defense. A reasonable juror could conclude that the Webers, through the language of their sponsored link advertisement, improperly suggested affiliation with Mary Kay. Were the jury to reach that conclusion, the fair use defense would not apply. The defendants are not entitled to summary judgment on the grounds that the fair use defense protects their use of the Mary Kay name to advertise their website.
The jury is going to have to decide this issue and whether the Google advertisements of TOP improperly suggested that they were affiliated with Mary Kay.
Probably the most important ruling in this opinion is on the issue of Mary Kay’s claims that TOP was tortiously interfering with the contracts of beauty consultants. The judge says the fact that the Webers knew consultants have contracts with Mary Kay, and knew what those contracts said, doesn’t necessarily mean that they’re interfering with the contracts. Just knowing about the contract isn’t enough. Mary Kay has to prove that TOP actively persuaded people to breach their contracts.
The Webers say they never know for sure who is still under contract and who is not when they’re purchasing Mary Kay products. The court threw out this claim by Mary Kay, saying:
Here, the Webers are plainly reaping the benefit of IBCs’ willingness to breach their contracts with Mary Kay. However, those IBCs contact the Webers of their own volition. Although the defendants undisputedly advertise their willingness to buy Mary Kay products to anyone who sees their website or newsletter, the ultimate decision to breach the contract is made by the IBCs. More importantly, the record does not show that the Webers exert any influence over those IBCs as they make that decision.
The opinion also says:
…despite the Webers’ knowledge of Mary Kay’s closed distribution system, they were ultimately nothing more than willing participants in the IBCs’ decisions breach their contracts with Mary Kay.
This ruling is very good news for the Webers and other inventory liquidators.
Mary Kay also went after TOP on the issue of tortious inteference with prospective contracts. They’re essentially saying the Webers interfered with MK signing up new consultants. The court laughed at Mary Kay and threw this out.
Finally, Mary Kay had a claim of “unjust enrichment” against Touch of Pink, saying essentially that the Webers have benefitted because they’ve committed fraud or done something else wrong. Mary Kay says that TOP is improperly using Mary Kay’s name and trademark, and making money from doing so. The judge threw out this silly claim as well.
The Webers fared very well in this round of litigation.
The lawsuit Mary Kay Inc. filed against Touch of Pink Cosmetics and Amy and Scott Weber carries on. Depositions are being taken and both sides are looking for evidence in discovery. This was the first lawsuit to be filed by Mary Kay against an “inventory liquidator,” and more have been sued since then.
The way Mary Kay is proceeding in this case is a bit interesting, however. The heart of the case initially appeared to be trademark infringement, although my opinion was that it was a very weak claim because it was clear that Touch of Pink was not using MK’s trademark in a confusing or misleading way.
It now appears that the real reason for this lawsuit is to stop liquidators from acquiring and reselling Mary Kay products. They are not only going after the liquidators, however. Mary Kay’s intent appears to be to stop consultants from selling their products to liquidators. Continue Reading →
Mary Kay is suing Sharon Lilly and Dennis Lilly, liquidators of Mary Kay products. You can read the full complaint in the case , but here’s the summary:
Sharon became a Mary Kay beauty consultant in January 2006. Mary Kay terminated her agreement in May 2006, alleging that she was selling Mary Kay products on the internet in violation of her consultant agreement. Sharon then started selling Mary Kay products at her website Sharon’s Cosmetics Shoppe.
Mary Kay is alleging that Sharon solicits current consultants to sell them her products so she can offer them on her site at a discounted price. It’s alleged that she “induces” consultants to violate their agreements with Mary Kay.
The company further alleges that Dennis Lilly (Sharon’s husband) became a Mary Kay beauty consultant in May 2006 to gain access to products directly from the company. Mary Kay terminated his agreement in April 2008.
The claims Mary Kay is making against the Lillys:
- Tortious interference with the contracts between Mary Kay and beauty consultants
- Use of Mary Kay’s trademarks and name without authorization
- Loss of business and loss of business relationships between Mary Kay and its consultants
- Loss of sales opportunities for other consultants
- Fraud due to false statements made to Mary Kay
- Unfair competition
- Trademark infringement
- Unjust enrichment
As in Mary Kay’s case against Amy Weber and Touch of Pink Cosmetics , I don’t think they can win on the allegation of trademark infringement. A seller of an item is allowed to use the name brand of that item to identify the product being sold. As such, inventory liquidators can use the name “Mary Kay” to describe the products they have for sale, so long as the product really are authentic Mary Kay items. (Common sense: Without being able to say “Mary Kay,” a seller of a product would be unable to accurately describe it.)
The liquidators have to be very careful, however, that they’re not misleading or confusing customers. They can’t make it seem like THEY are Mary Kay. They can’t create a website that fools people into thinking they’re shopping at a Mary Kay website.
One issue that will be very interesting is Mary Kay’s allegation that the Lillys:
“… unlawful and unauthorized use of the trademarks and name harms not only Mary Kay, but also consumers who are confused or deceived into purchasing products through her website believing they are purchasing guaranteed products from an authorized Mary Kay Independent Beauty Consultant.”
Are they really confusing consumers? The Lillys’ website says:
Affordable Beauty …
Now you can enjoy all the first-quality products of the #1 Best Selling Cosmetics and Skin Care products at prices you can afford. Shop at your convenience, from the comfort of your home. No longer do you need to be bothered by the telephone sales calls, someone asking you to have a Mary Kay Party, or other such annoyances. When you shop here, you receive the same great Mary Kay products, with a satisfaction guarantee policy and great value prices.
The Mary Kay products you purchase from Lilly’s Cosmetics and Skin Care are all new and in their original packaging. They have not been tested or used in any way. All products are fresh, current date products. (Items in the Vintage Mary Kay section excepted.)
All products have been purchased directly from Mary Kay Independent Beauty Consultants who need to balance or liquidate their inventory.
This web site, or anyone affiliated with it, is not endorsed by or affiliated with Mary Kay, Inc. All products are authentic, first-quality Mary Kay products. Mary Kay, is a registered trademark. All trademarks mentioned in this Shoppe are registered trademarks of their original owners who reserve all their rights and ownership. The use or mention of any trade-name, product name, or trademark in this Shoppe in in no way intended to suggest that the trademark owner is at all affiliated with or endorses this Shoppe. The use of any trade name or trademark is for identification and reference purposes only and does not imply any association with the trademark holder of their product brand. This Shoppe is not endorsed by Mary Kay Cosmetics Inc. in any way.
This text is identical to what was on the front page as of February 1, 2008, so this wording doesn’t appear to have been changed in light of the filing of the lawsuit.
The verbiage on the page makes it clear to me that they’re not affiliated with Mary Kay or endorsed by them. The Lillys have made it clear that they’re selling authentic Mary Kay products, but they are NOT Mary Kay. Why Mary Kay Inc. would make the claim that they’re misleading consumers to think that they’re approved by MK is beyond me.
Why is Mary Kay going after liquidators of products? Probably because they can. They have deep pockets and they’re hoping that the liquidators will capitulate for financial reasons.
Are the liquidators really hurting Mary Kay? I don’t know. Certainly they’re offering a much needed service for consultants who can’t sell their products or return them to Mary Kay for a refund. Of course, the liquidators are offering products to buyers of MK at a reduced price. So yes, I suppose those sales might be taking something away from active consultants.
But is there anything wrong with that? Can’t I sell something I own at any price I want to? What if I want to sell something at a cheaper price than stores are selling it because I know it is more likely to sell faster?
I wonder which liquidator is next on Mary Kay’s hit list?
This is a transcript of the voice message Mary Kay Inc. president of U.S. operations Darrell Overcash left for sales directors today about the lawsuit against Touch of Pink Cosmetics (details on the lawsuit here):
This is Darrell Overcash and this message is being sent to all Independent Sales Directors. We want you to be among the first to know that on May 7th, Mary Kay Inc filed a lawsuit in federal court in Dallas TX against Touch of Pink Cosmetics and its owners, Amy Weber and Scott Weber.
With this lawsuit, MK seeks to prevent Touch of Pink Cosmetics and the Webers from their improper procurement and sale of Mary Kay products and their misuse of the company's trademarks and goodwill. Mary Kay made the decision to pursue litigation after careful consideration of all the company's options. Litigation is a serious undertaking and is rarely a swift or easy process.
However Mary Kay is committed to vigorously pursue this litigation in order to protect your individual rights to conduct your business as Independent Beauty Consultants, Independent Sales Directors and Independent National Sales Directors AND to protect the Ultimate Consumers of Mary Kay Products.
We know you will support us in this effort and we sincerely appreciate your cooperation, concern, and patience as we move forward with this litgation. If you do have any quesitons about this matter, plesae feel free to contact the legal support team at 972 687 5777. Thank you.
Touch of Pink Cosmetics and Amy and Scott Weber have filed an answer to Mary Kay’s lawsuit against them. You can see the answer in its entirety here. I’ll summarize the high points of this answer, and give my comments in italics.
Touch of Pink and the Webers admit some of the most basic things:
- Amy is a former consultant who was terminated in September 2005
- The company does advertise and sell Mary Kay products on the internet.
- The Webers began selling Mary Kay items on eBay with the username “scottw815” in March 2005.
- Touch of Pink does not get its products directly from Mary Kay.
- The wording on the TOP website indicates that they buy products for ½ of wholesale value, and that Mary Kay consultants may be eligible to send their products back to MK for a 90% refund.
- TOP has shipped products to multiple countries.
- Touch of Pink has purchased internet advertising that was linked to the keywords “mary kay.”
They deny certain critical allegations such as:
- Touch of Pink is encouraging current Mary Kay consultants and directors to violate their contracts with Mary Kay, or that the company is intentionally interfering with those contracts
- The company is trying to “confuse and deceive consumers” by wrongfully using the Mary Kay name and trademark. (The laws do allow people/companies to identify the product they’re selling, and saying “Mary Kay” would fall under this. Identifying the product you’re selling isn’t wrongful use of a name or trademark.)
- Touch of Pink advertises all products as made by or affiliated with Mary Kay. (The website actually just says that the Mary Kay products are authentic, but makes no representation about “all” of the products.)
- Engaging in “unlawful” advertising (What law prohibits Touch of Pink from saying “your destination for all your favorite Mary Kay Products at 50% – 75% off Retail”? None that I’m aware of.)
- Soliciting current Independent Beauty Consultants (IBCs) via email.
- The business strategy of Touch of Pink relies on inducing current consultants to violate their contracts with Mary Kay. (It appears that a substantial portion of the TOP items are acquired from former consultants, not current ones. Even if inventory is from current consultants, I don’t believe TOP has a duty to inquire about the status of their contracts with MK.)
- TOP “unlawfully” mass markets Mary Kay products around the world. (There’s that “unlawful” word again. What marketing is unlawful?)
- The business of Touch of Pink deters people from signing beauty consultant agreements with Mary Kay. (People are deterred from signing up with Mary Kay because they’ve done the research and find out the business stinks!)
- TOP obtains Mary Kay products in an “unlawful” manner. (What laws are they breaking when they buy products from current or former consultants?)
- Wording on the Touch of Pink website and eBay store was false and misleading and caused confusion about their affiliation with Mary Kay. (In my opinion, TOP actually went out of their way to make it clear that they weren't MK and that they weren't affiliated with MK in any way.)
Touch of Pink also denies that they need “authorization” from Mary Kay to sell MK products on their site or on eBay.
I missed this in the original filing by Mary Kay: “Although most of the more than 1.8 million Mary Kay independent sales force members around the world conduct their independent Mary Kay businesses with honesty and integrity…” How on earth would corporate know this?
In general, Touch of Pink says they’re not infringing on trademarks, they’re not trying to confuse or deceive consumers, and that they’re not trying to get people to violate their contracts with Mary Kay.
Touch of Pink also says that they’re lawfully purchasing and reselling Mary Kay products, and that using the name Mary Kay in selling genuine Mary Kay products is permitted as fair use.
Go Touch of Pink!!! Now get into discovery and get your hands on some information that will prove what a scam Mary Kay is!
Darrell Overcash just sent a voice message to all Mary Kay sales directors. Mary Kay Inc. is filing a lawsuit against Touch of Pink Cosmetics. The company is a known liquidator of Mary Kay products.
They basically help beauty consultants who were frontloaded with tons of product. The company purchases it from the consultant at a discount, and then passes those savings on to consumers. It’s a win for everyone: consultant unloads useless overstock, customer gets a discounted product, and Touch of Pink makes a little money in the process.
Mary Kay Inc. v Amy L Weber, Scott J Weber, and Touch of Pink Cosmetics
The entire complaint in the case can be seen here. This is my summary of what the case is about:
Amy is a former Mary Kay consultant. Amy, her husband, and Touch of Pink are accused of encouraging and helping consultants to violate the terms of their contracts with Mary Kay and confusing and deceiving customers through the "wrongful" use of the Mary Kay name and trademark to sell products on their website and on eBay.
Mary Kay says Amy was terminated as a consultant for selling on eBay after numerous warnings. The company says they now solicit consultants to violate their contracts by selling their products to Touch of Pink, "rather than to ultimate consumers for the unauthorized Internet resale of the products." Doing this allegedly "interferes" with Mary Kay's relationships with consultants.
Mary Kay says the use of the Mary Kay name and trademark by Touch of Pink confuses and deceives customers. They say that "…the Weber Defendants' website suggests that all products sold on the website are products manufactured or affiliated with Mary Kay; yet the Weber Defendants sell products on the website that are not affiliated in any way with Mary Kay. The Weber Defendants' dishonest attempt to "pass-off" these products as Mary Kay products is tantamount to unfair and deceptive trade practices and further violates Mary Kay's established rights."
Except here's what I found on the Touch of Pink site:
We carry authentic products that were originally purchased directly from the Mary Kay warehouse. Although, they are not new from the warehouse, they are product from former consultants of Mary Kay.
I also found this:
We sell genuine Mary Kay products. This website is not endorsed by or affiliated with Mary Kay Inc. This company has been established by former Mary Kay Consultants who are assisting consultants to liquidate their inventory. We also provide a place for consultants and customers to locate hard to find retired product or even new Mary Kay items at a great discount!
Neither of these statements seems dishonest or confusing to me, and it sure doesn't sound like they're trying to "pass off" anything! The products were manufactured by Mary Kay and that's what the site says!
And in case you're wondering if the site was changed after the lawsuit was filed yesterday… this wording is from May 4th and May 6th cached copies of the site. The lawsuit also includes printouts of web pages from May 6th that say the exact same thing. What's being claimed in the lawsuit isn't even what's said on the site, per their own copies of the site!
The lawsuit also complains that Weber has purchased Google advertising linked to the keywords "Mary Kay," so that when people searching Google for the phrase "Mary Kay," the Touch of Pink Cosmetics site comes up in the sponsored results.
This is made even more interesting by the fact that Mary Kay itself has been purchasing Google advertising linked to the words "Pink Truth." When people search for the keywords "pink truth," one of the sponsored results is Mary Kay itself. (See my screen shots of this here and here .)
The lawsuit also claims that the Webers say all their products are manufactured by Mary Kay, but that they are now selling sterling silver jewelry and a mineral product called "Sheer Miracle" that aren't made by Mary Kay. I don't see anything on the site saying that ALL their products are manufactured by MK, rather I see that the MK products are said to be genuine and manufactured by MK.
My take on this? Nothing on the Touch of Pink site is confusing to me. It doesn't seem like they're Mary Kay, and any person with a brain is not going to be confused into thinking they're Mary Kay. Sure… they say Mary Kay because they are allowed to identify the products they have for sale… which happen to be Mary Kay brand.
I hope this is not an attempt to just drive them out of business by sticking them with a bunch of legal fees they can't afford…
This is what Mary Kay Inc. sent out to the national sales directors in April 2007 about losing the Tristrata patent lawsuit. I love the company's justification of its actions and denial of wrongdoing. "We didn't do it. Honest!!!!"
As you may recall, Mary Kay Inc. was one of many cosmetics companies sued in 2001 by Tristrata Technology, Inc., which claimed that Mary Kay used patented technology owned by Tristrata relating to the use of Alpha Hydroxy Acids (AHAs) in certain Mary Kay® products beginning in the early 1990s. We began phase-out of products containing AHAs long before the litigation was filed, and we have not produced products containing AHAs for many years.
In March 2005, a Delaware court returned a verdict in favor of Tristrata. More than a year following the jury verdict, the court entered a judgment in the case against Mary Kay. Though we appealed the verdict, the decision of the lower court in favor of Tristrata was recently upheld.
We are, of course, disappointed by this outcome. We strongly maintain that we did not infringe Tristrata's patents, as we developed our own patented AHA technology in a collaborative process between Mary Kay's own laboratories and an outside scientist not affiliated with Tristrata. However, the jury did not agree with our position, so Mary Kay will comply with the court's ruling. The amount of money involved will not affect the Mary Kay® product line or our service to our independent sales force in any way. The Company has prepared for this scenario and has taken appropriate action to be in a position to comply with the court's decision.
You should know that it is not unusual for a company our size on occasion to be involved in patent litigation. Rest assured, however, that we will continue to provide innovative products for you while always respecting the intellectual property rights of others. That is what we did in this case and that is what we will continue to do.
While we have not seen any media attention on this decision other than a few initial reports, we are providing this information to prepare you in case you need to verbally respond to any questions you may receive. Certainly you should feel free to defer any questions to us, and if you personally have any questions regarding this matter, do not hesitate to contact Legal Support .
Mary Kay Inc. filed a motion with the court in the Robin Blackmond Dunda v Mary Kay Inc. lawsuit, asking that certain documents be filed under seal. This means that certain documents and evidence would be protected and not available for examination by the general public. Robin and her attorney oppose that motion.
It appears in this motion filed by Attorney David Eisenstein on October 9, 2007, that Mary Kay Inc. based part of its argument on the idea that certain documents and testimony might contain trade secrets. Also, Robin has requested that Mary Kay Inc. produce the company’s financial statements, and of course, the company wants those under seal. Continue Reading →