5:36pm PT by Ashley Cullins
Makeup Becomes War Paint in Legal Battle Over Kardashian Beauty Line
The Kardashian sisters are at war with a cosmetics distributor over a beauty line that bears their famous family name, according to a pair of complaints filed Wednesday in California federal court.
Kim, Khloe and Kourtney Kardashian are seeking an injunction against Haven Beauty and Hillair Capital for trademark infringement, violation of the right of publicity and false association over the companies' Kardashian Beauty line.
The Kardashians claim in 2012 they granted an exclusive five-year license to Boldface Licensing + Branding to use their names, images, trademarks and likenesses for the cosmetics line so long as all uses were approved in writing by the sisters first. The "Kardashian Image" includes each sister's name, fame, nickname, initials, autograph and voice, along with actual images and video.
According to the complaint, Boldface ran into financial trouble in 2013 and Hillair offered millions in loans in the form of secured convertible debt, which it later forced the company to convert to preferred equity. With Boldface underwater, Hillair sued and the court appointed a receiver to sell the company's assets, including the license agreement. Hillair bid on and won the Boldface assets and the license agreement and founded what would become Haven Beauty.
Under the agreement, the sisters claim they were entitled to royalties from the sales of Kardashian Beauty products and, as of February 2016, they hadn't received a dime. So their attorney sent a letter informing Hillair it was breaching the license agreement.
"Specifically, the February Breach Letter demands payment of the royalties and legal fees incurred by the Kardashians from various legal actions relating to products sold under the License Agreement, and demanded that Hillair stop its unauthorized use of the Kardashian Images," states the complaint. In response, the Kardashians claim, Hillair filed a lawsuit in L.A. County Superior Court and chose not to name Haven in an effort to avoid the arbitration clause. The court granted the stars' motion to compel arbitration anyway and stayed the case in June.
Meanwhile, Haven's CFO Jeanene Morgan contacted the Kardashians' general counsel Todd Wilson to request consent on a new line of products. Wilson was "puzzled" given the litigation, but told Morgan she could send samples of the product but nothing would be approved until the dispute with Haven and Hillair was resolved.
The Kardashians claim they made a last-ditch effort to allow Hillair and Haven to pay the royalties owed, and the companies made it clear they would not comply unless the Kardashians paid damages for failing to provide marketing support for the products. The reality stars claim under their agreement that support is dependent on royalties having been paid up to date.
The Kardashians sent a notice of immediate termination on July 8 and claim Haven not only refused to accept it but also launched a new line products using the "Kardashian Image" without authorization.
Because the license agreement contains a mandatory arbitration provision, most of this will play out behind closed doors — but their contract allows for injunctive relief to be sought in open court. The sisters are seeking a temporary restraining order to bar Haven and Hillair from using their names, likenesses, identities and personas pending the outcome of mandatory arbitration through JAMS.
Later Wednesday, Haven filed its own temporary injunction against the Kardashian sisters, along with their personal services companies, claiming they're the ones who breached the licensing deal.
Haven claims the Kardashians attempted to "terminate the License and destroy Haven" because they were unhappy with the deal they made with the financier of the cosmetic line, Hillair. According to the complaint, efforts to renegotiate that deal failed and the sisters retained a lawyer to fabricate breaches by Haven to end the agreement.
"They failed to take any action, lying in wait until 12:07 a.m. on July 8, 2016 — the day of Haven’s launch of the new KB line, which the Kardashians knew about for months — to email notice of termination of the License “effective immediately,” timed to cause maximum damage and disruption to the business," states the complaint. "They then proceeded to publicly disavow association with Haven and the KB products and publicly accuse Haven of trademark infringement."
Haven claims after its inception in 2014 it repaired strained relationships with retailers and developed new products, packaging and an e-commerce site. "To date, Haven has spent nearly $9,900,000 in support of the KB line," states the complaint, which alleges the reality stars didn't live up to their end of the deal by failing to promote the line and publicly supporting competitors.
"The Kardashians have failed and refused to perform their marketing and promotional duties in support of the KB line, while blatantly violating Haven’s exclusivity rights by repeatedly using the Kardashian name and image to promote competing cosmetics products and by disparaging Haven and the KB line," states the complaint.
Haven is seeking a temporary restraining order to preserve the status quo. "It is scarcely possible to imagine a clearer case of irreparable harm," states the complaint. "If the Kardashians' wrongful actions are allowed to stand, a multi-million dollar business will be destroyed."
From the sisters' perspective, preserving the status quo would mean honoring the termination.
The Kardashians' attorney Michael Kump tells The Hollywood Reporter: “We believe that the license agreement was properly terminated and that Haven Beauty and Hillair have no right to be using the Kardashians' trademarks, names or images in any manner whatsoever.”