Gel Nail Company Sues Chinese Supplier for Theft of Trade Secrets

A complaint filed on Thursday in the Northern District of Illinois by GeLab Cosmetics LLC alleges that the defendants took advantage of a business relationship to create knockoff versions of the plaintiff’s nail gel.

The case was filed against Zhuhai Aobo Cosmetics Co., Ltd and several other companies and individuals, all based overseas in China.

GeLab is described in the complaint as “a cosmetic company that develops, designs, manufactures, and markets innovative nail gel products.” Over the past four years, the plaintiff explains that they have put both time and resources into developing cutting-edge, distinguished products.

The plaintiff said they signed a purchase agreement with defendant Aobo in July of 2020. The agreement included a number of confidential clauses, effectively creating a “trial relationship” between the two parties in which the plaintiff would provide the defendant with color designs and related confidential information while the defendant would manufacture the nail gel product accordingly.

Defendant Aobo became GeLab’s supplier through the purchase agreement, the complaint said. The agreement also detailed contractual terms that restricted the ways in which Aobo would be able to use and disclose information about the plaintiff’s product. Specifically, “Aobo promised not to use or permit anyone else to use GeLab’s proprietary work or information against GeLab’s interests, including by making a derivative product to compete with GeLab.”

The plaintiff asserts that instead of abiding by the aforementioned contractual terms, the defendants used GeLab’s confidential and proprietary trade secrets to develop and market competing products. The complaint also notes that defendant Li sent his daughter to GeLab to work as an unpaid intern, where she had access to GeLab’s trade secret involving product manufacturing and their on-line marketing operation.

 GeLab contends that “rather than design[ing] their own products to compete fairly in the marketplace, Defendants instead misappropriated GeLab’s proprietary technologies, critical business strategies and sensitive sales statistics and other highly valuable confidential GeLab information.” The defendants then engaged in direct competition with the plaintiff by marketing products identical to GeLab’s on amazon.

Due to the defendant’s “brazen misappropriation and theft of trade secrets,” the complaint cites violations of the Defend Trade Secrets Act and the Illinois Trade Secrets Act, constructive fraud, fraudulent concealment, breach of the purchase agreement, breach of fiduciary duty, fraudulent misrepresentation and civil conspiracy. The plaintiff is seeking a trial by jury, preliminary and permanent injunctions stopping the defendant from engaging in further unfair competition or misconduct, a declaration that the defendants have no right to GeLab’s trade secrets, punitive damages, pre- and post-judgment interest, litigation fees, and any other relief deemed appropriate by the court.

The plaintiff is represented in the suit by Glacier Law LLP.