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LOS ANGELES — The Kardashian makeup brand is facing a legal setback.
This story first appeared in the March 14, 2013 issue of WWD. Subscribe Today.
U.S. District Court for the Central District of California Judge Audrey Collins has issued a preliminary injunction blocking Khroma Beauty by Kourtney, Kim and Khloé. The injunction stems from a trademark dispute involving Lee Tillett Inc., an Altamonte Springs, Fla.-based company that sells a line called Kroma Makeup, and Santa Monica, Calif.-based Boldface Licensing + Branding, holder of the license for the Kardashian makeup brand. Boldface brought a lawsuit last year to obtain a declaration that Khroma Beauty doesn’t infringe on Tillett’s trademark, and Tillett filed a trademark infringement countersuit. The injunction was immediately stayed pending Boldface’s appeal of the decision to the Ninth Circuit Court of Appeal.
Tillett claims that trademark confusion has impacted its business significantly. In court documents, Tillett asserts Kroma Makeup’s sales have decreased 25 percent since the launch of Khroma Beauty. After considering arguments from both sides, Collins determined an injunction could amount to millions of dollars in losses for Boldface, but withholding an injunction “will destroy Tillett’s business, which it has built over a decade, causing losses of hundreds of thousands” and perhaps millions. Since 2008, Kroma Makeup’s sales have totaled $200,000 annually in the U.S. and reached $1 million in product sales in the U.K. Khroma Beauty is certainly a much bigger beast. For its second quarter ending Dec. 31, Boldface’s net revenues were $1.526 million driven by Khroma Beauty.
“We are pleased with achieving revenues this quarter and a successful launch of our Khroma Beauty by Kourtney, Kim and Khloé brand,” said Nicole Ostoya, Boldface’s chief executive officer, about the results. “We look forward to continuing our growth and to launching the Kardashian brand in additional doors and retailers in the U.S. and internationally.”
Boldface has already paid an advance of $1 million to the Kardashian sisters, according to filings with the Securities and Exchange Commission, which also reveal Boldface has agreed to pay minimum royalties of roughly $4.7 million to $5.2 million.
By the end of this month, Bolface planned to roll out Khroma Beauty to 5,321 stores in 48 states, including Duane Reade, CVS, Ulta, Sears, H-E-B and Burlington. Tillett is allowing retailers with Khroma Beauty to sell through its current stock.
Not all news on the legal front is bad for Boldface. Chroma Makeup Studio in Beverly Hills had also pursued an injunction against Khroma Beauty in the U.S. District Court for the Central District of California, but was denied by Judge Paul L. Abrams.