March 13, 2013 8:39am PT by Eriq Gardner
Kardashian Cosmetics Line Slapped With Injunction
Being a business-savvy celebrity has its plusses and minuses. On the positive side, Kim, Kourtney and Khloe Kardashian can exploit their fame and awesome social media following to make almost any brand a success. On the negative side, when things go wrong, they really go wrong.
Witness the mess that Boldface Licensing + Branding, which licenses the Kardashians' names and likenesses, now finds itself in.
The company is now seeking emergency relief at the Ninth Circuit Court of Appeals after a California federal judge on Monday issued a wide-spanning injunction over the Kardashians' line of cosmetic goods. (The judge has stayed entry of the injunction for a week and possibly longer to allow time for the appeal.)
As a result of U.S. District Court judge Audrey Collins' finding that the Kardashians' "Khroma" brand was likely to infringe the trademark rights on Lee Tillett's "Kroma" line of cosmetics, 5,321 stores in 48 states may soon no longer be selling "Khroma." The damage has been estimated in the millions of dollars, but the judge says that can't overcome what would happen to Tillett.
"Tillett has demonstrated that it will likely lose business opportunities, customers, and goodwill due to Boldface's use of the confusingly similar Khroma Beauty marks," writes the judge. "This Court has little doubt that, in short order, the Khroma Beauty products will likely eliminate Tillett's business entirely, creating irreparable harm to justify an injunction."
Lee Tillett has run a makeup business based in Florida for years. He's enjoyed some success, selling an average of $200,000 worth of products per year. He's also explored potential endorsement deals. In 2010, his representatives held discussions with TLK Fusion, which allegedly acted as Kardashian's product-placement agent for a show, The Spin Room, that was being produced by Kim.
The discussions didn't amount to anything, but soon thereafter, Boldface paid the Kardashians an upfront advance of $1 million for licensing rights with guaranteed minimum royalty payments of $4.6 million to $5.2 million for a cosmetics product line that became known as "Khroma."
This caused Tillett to object.
Boldface filed a lawsuit seeking declaratory relief, and Tillett responded with a $10 million counterclaim.
This week, Judge Collins ruled in Tillett's favor on a motion for a preliminary injunction.
The judge finds there's similarity in the marks in that they "sound identical" and "appear nearly identical." The judge also finds that there's a relatedness of the goods in that the "parties both sell cosmetics, and in fact, some of their products are identical, such as blush, compacts, gloss, lip kits, foundation, eye shadow, and bronzer."
Here's a look at the logos:
Looking at the commercial strength of the two marks, Judge Collins gives respect to the popularity of the Kardashian sisters.
The judge writes, "Boldface's marks are backed by the Kardashians' nationwide fame, and Boldface's product line has received extensive nationwide media coverage, has been shown to millions of viewers on an episode of the Kardashians' reality television show, has been promoted on each of the Kardashian sisters' websites and social media pages, and in the national press. The products are now in 5,321 stores in 48 states, and by April 2013 the products will be available on Boldface's website. And this is just Boldface's initial launch."
But being so popular isn't always a good thing.
"Boldface's 'ability to saturate the marketplace creates a potential that consumers will assume that [Tillett's] market refers to [Boldface], and thus perceive that the businesses are somehow associated,'" writes the judge, who was also shown examples of Tillett's clients experiencing actual confusion.
Boldface argued there was a "crowded field" of marks similar to Tillett's Kroma mark, but judge doesn't buy the argument. The judge also finds that Boldface had "constructive knowledge" of Tillett's rights upon a trademark registration search and had "actual knowledge of Tillett's rights" upon getting a cease-and-desist letter.
The judge was begged by Boldface to avoid an injunction. The extraordinary measure would cause it to incur "prohibitive storage costs," the company said, lose the money it had spent on advertising in beauty magazines and possibly breach the contract with its retail partners including Ulta, Sears and CVS.
The judge writes that she "is well-aware of the impact an injunction will have on Boldface's business, which could amount to millions of dollars in losses. But the Court is also fully convinced that withholding an injunction will destroy Tillett's business, which it has built over a decade, causing losses of hundreds of thousands (and perhaps millions) of dollars in past investment and future revenue."
She continues on by saying "the difference between the two is that Tillett has superior rights to Boldface. As a result, the balance of hardships tips sharply in Tillett's favor."
Tillett has agreed to allow the stores to sell through their current Khroma products, but unless Boldface is able to get the Ninth Circuit to stay and reverse the ruling, the Kardashians' line of cosmetic goods appears to be in deep trouble.
Tillett is represented by attorneys Elliot Gipson and Gregory Fayer at Fayer Gipson. Here's the full ruling.
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