Shiseido has nabbed a former executive from L’Oréal with knowledge of its product developments, and the company is taking it as a competitive threat.
The French beauty conglomerate on Tuesday urged a local New York court to stop Antonios Spiliotopoulos, its former senior vice president of consumer products for the Americas, from taking up a new position with Shiseido, arguing its former executive is subject to a non-compete agreement that doesn’t expire until next month.
Beyond the simple non-compete — a widely used clause in employment contracts that bars an employee from decamping for a rival for a certain period of time — L’Oréal claims that Spiliotopoulos is privy to confidential and proprietary information surrounding the development of “personalized” cosmetics.
A Shiseido spokeswoman declined to comment, citing a company policy on ongoing litigation. A L’Oréal representative could not be reached for comment.
Guive Balooch, L’Oréal’s global vice president, said in a court filing that the development of products that are customizable is “one of the most revolutionary innovations in the beauty industry,” and that L’Oréal’s work in the space has specifically included Spiliotopoulos.
Balooch said Spiliotopoulos worked on Lancôme’s Le Teint Particuler foundation, currently sold at a small number of Lancôme’s Nordstrom counters, which he described as a “proprietary device” making use of patented technology to detect individual skin tones and then instantly create a customized foundation blend.
“The confidential, highly proprietary personalized products working their way through L’Oréal’s product development pipeline will allow L’Oréal to offer products for all consumers, of every ethnicity, race and skin tone,” Balooch said. “It is the ‘holy grail’ for beauty companies and consumers alike, and it deserves protection.”
By spring of this year, Balooch said Spiliotopoulos had been promoted at L’Oréal and was working in its luxury division with the specific mandate to work on personalized products. Sometime after that, Balooch claims he met with Spiliotopoulos, at his request, and presented “L’Oréal’s entire global strategy for our personalized products, from hair to skin to makeup.” Spiliotopoulos was then given further information in a “detailed manner” at an additional meeting with other members of the L’Oréal team.
Considering his long tenure with L’Oréal, where he started in 1994 as a quality manager, Spiliotopoulos was tasked with solving some problems with the LTP system that needed to be overcome for L’Oréal to have a “profitable product expansion for our brand,” Balooch said.
In his expanded role, Spiliotopoulos was given access to LTP’s profit and loss figures, costs, advertising budgets, names of suppliers and general supply chain information aimed at connecting lab formulations and manufacturing partners to allow a customer to reorder specific shades, which would allow L’Oréal to have a much wider rollout of the product.
Balooch said this information “would be invaluable to Shiseido, which is a major competitor in the race to conquer the customized cosmetics market.” Balooch pointed to a Color Match program and related app offered by Shisheido’s BareMinerals brand, and said he had “specifically discussed” the program with Spiliotopoulos and how L’Oréal planned to compete against it, according to his filing.
“It would be folly to think that Shiseido is not also working on in-store solutions as well as other online innovations, and that the knowledge possessed by Spiliotopoulos will be highly useful to Shiseido in that regard,” Balooch added. “Whichever company can take the lead in the marketing of customizable skin care products will develop an enormous commercial advantage.”
Considering the competitive landscape, Balooch and L’Oréal asked the court to immediately enjoin Spiliotopoulos from working with Shiseido. According to an e-mail exchange between company lawyers, Spiliotopoulos started work for Shiseido last week after officially leaving L’Oréal in June.
In another October e-mail exchange, Spiliotopoulos referenced that he had made L’Oréal aware of his intention to join Shiseido when he resigned and knew of the six month period included in his non-compete agreement, but he asked to be released from the non-compete two months early so he could start “familiarizing” himself with his new role.
He argued that while he resigned in June, he had left his position as head of operations for consumer products four months before, putting about eight months between his supply chain or operations work for L’Oréal and his work at Shiseido.
But L’Oréal denied his request, citing his previous and current “detailed, extremely confidential information” about its global supply chain strategy and the fact that Shiseido is a “very active competitor.”
Spiliotopoulos responded that being kept from starting his new job would be “detrimental” to his career, but added that he would continue to “totally respect all confidentiality obligations.”
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