Glamour, Innovation, and the Law: The Legal Forces Shaping the Beauty Industry

First impressions wield the power to unlock doors and create new opportunities, serving as the foundation of the thriving beauty industry. The stakes are high in our ever-changing world where allure meets ambition. In 2022, the beauty market —which consists of skincare, fragrance, makeup, and haircare — generated approximately $430 billion in revenue.[1] Thus, the beauty industry has “proven to be resilient amid global economic crises and in a turbulent macroeconomic environment.”[2] This sector is not just about selling products; like trying new foods to expand our palate, we can shape our identities through deliberate choices concerning aesthetics.[3] As consumers become savvy about their choices, the intersection of law and beauty reveals a fascinating landscape where regulation meets innovation.

Intellectual Property in the Beauty Industry

There are three intellectual property areas that play a vital role in the beauty industry: Trademark, Copyrights, and Patents.[4]

A trademark is commonly understood as a brand, while legal professionals often call it a source identifier.[5] It can be a word, phrase, slogan, or logo that consumers associate with a specific source. In commercial contexts, it’s typically marked with the ® symbol.[6]

Copyrights are obtainable for “original works of authorship,” including literary and artistic works.[7] Currently, copyright protection is automatic as soon as a work is created; there’s no need to register it or use a copyright notice.[8] In general, if someone reproduces a significant part of the original work without permission, they are considered an infringer and must provide a valid defense, like fair use, to avoid liability.[9]

Aside from providing strong protection for innovations and processes, patents can serve as a mechanism to combat the massive copycat market and be utilized as a marketing tactic.[10] To protect their brand identity and strengthen their presence in the sustainable beauty market, many cosmetic brands are patenting their packaging—often featuring innovative, sustainable, or biodegradable designs—to prevent competitors from copying their products.[11]

Case Study: Islestarr Holdings Ltd. v. Aldi Stores Ltd.

In 2019, Charlotte Tilbury’s company, Islestarr Holdings Limited, brought proceedings for copyright infringement against Aldi Stores Limited for selling a similar product to Tilbury's Filmstar Bronze and Glow palette, a makeup kit with two powders: one for adding a natural tan and one for adding a subtle shine.[12]Aldi admitted to having been aware of Tilbury's designs.[13]  The Court applied the “Designers Guild” test to determine whether the two products appear to be “the result of copying rather than of coincidence”.[14] The High Court of England and Wales granted summary judgment in favor of Islestarr Holdings Limited on the basis the designs were remarkably similar, which constituted copyright infringement by Aldi.[15] 

Case Study: Carell v. Shubert

This case centered around the dispute concerning the copyright in certain makeup designs (the “Makeup Designs”) created for the cast of the Broadway musical Cats.[16] Plaintiff, Candace Anne Carell, a makeup designer and artist, filed this action against Defendant, The Shubert Organization, Inc. (“Shubert”), a New York corporation that is a producer of Cats and a licensee of defendant The Really Useful Group, Ltd. and 17 other defendants.[17] Plaintiff asserts claims for copyright infringement and false designation arising out of defendants’ use and publication of the Makeup Designs.[18] Plaintiff also seeks a declaration of sole ownership of the copyright in the Designs.[19] The New York Southern District Court found that the Plaintiff’s allegations against the defendants were deemed vague and lacking specific details about their participation or authorization of the infringing acts.[20] Also, the court pointed out that general statements about their roles (e.g., being a producer or having a financial interest) without specific actions or involvement in the infringement did not meet the necessary pleading standards for establishing liability.[21] Thus, the Court ultimately granted defendants’ motion to dismiss, finding insufficient evidence of substantial similarity or access.[22]

  Islestarr Holdings Ltd. v. Aldi Stores Ltd. and Carell v. Shubert are significant in understanding copyright law, especially in the context of artistic workers, and it illustrates the challenges faced by creators in protecting their intellectual property.

Legal Framework Governing Cosmetic Products

U.S. Regulations (FDA)

The regulation of cosmetic products in the United States is governed by a legal framework established by the Federal Food, Drug, and Cosmetic Act (FD&C Act) and the Fair Packaging and Labeling Act (FPLA), under the oversight of the Food and Drug Administration (FDA).[23] The legal framework governing cosmetic products is essential for ensuring consumer safety and product efficacy.

In the United States, the Food and Drug Administration (FDA) oversees the regulation of cosmetics, requiring manufacturers to ensure that their products are safe for use and properly labeled.[24] The primary laws governing cosmetics sold in the United States are the Federal Food, Drug, and Cosmetic Act (FD&C Act) and the Fair Packaging and Labeling Act (FPLA).[25] The FDA does not require premarket approval for cosmetics, except for color additives; manufacturers must ensure their products are safe and comply with labeling regulations.[26] Companies are responsible for conducting safety assessments and maintaining documentation, but they are not obligated to share this information with the FDA.[27]

EU regulations (Cosmetics Regulation)

Conversely, the EU has implemented the Cosmetics Regulation, which establishes more stringent safety standards. Regulation (EC) No. 1223/2009 is the main framework for cosmetics in the EU, enhancing safety standards and streamlining processes for manufacturers.[28] It introduces requirements for a designated “reasonable person,” centralized product notification through the EU Cosmetic Products Notification Portal, and mandatory reporting of serious undesirable effects.[29] The regulation also establishes specific rules for nanomaterials, which require explicit authorization and clear labeling in ingredient lists.[30]

Ingredients banned in the EU but allowed in the U.S.

The European Union has banned the use of more than 1,300 different cosmetic ingredients, while the United States has only banned 11.[31] In the ongoing debate over cosmetic safety, several ingredients banned in the European Union (EU) remain permissible in the United States.[32]

For example, Formaldehyde, a known carcinogen linked to various health risks, is still used as a preservative in some U.S. products.[33] Hydroquinone, a skin-lightening agent, has been associated with skin irritation and potential long-term effects, which prompted the EU to prohibit its use while still being allowed in the U.S. market.[34] Similarly, parabens, commonly used as preservatives, have been scrutinized for their potential hormonal effects and are banned in the EU, but are still to be found in American cosmetics.[35] The use of these ingredients demonstrates a major disparity in regulatory standards between the two regions, which raises questions about the adequacy of U.S. cosmetic regulations in protecting consumers.

By examining the differences in ingredient safety assessments, it becomes clear that the EU prioritizes stringent safety measures, which could serve as a model for reforming U.S. regulations to better safeguard public health.

Impact on Marketing and Product Formulation

These differences between U.S. and EU regulations significantly impact cosmetic formulation and marketing strategies. Brands operating internationally must navigate these regulatory landscapes carefully, adapting their products to align with varying safety standards.[36] For instance, a company may need to reformulate its products to comply with EU regulations by eliminating banned ingredients, which could alter product availability and marketing claims.[37] Due to the necessity to balance consumer demand with compliance to diverse safety standards, it is important for cosmetic companies looking to succeed in both U.S. and European markets to understand and address these regulatory differences.[38]

Misleading Advertising Claims

Beauty brands often face scrutiny for making false or misleading claims about their products. This can include exaggerated effects, such as claiming a product can eliminate wrinkles or provide instant results without scientific data. The Federal Trade Commission (FTC) guidelines in the U.S., require that “claims in advertisements must be truthful, cannot be deceptive or unfair, and must be evidence-based.”[39] Failure to comply with these guidelines can lead to significant penalties and damage to brand reputation.[40]

Case Study: Solis v. CoverGirl Cosmetics et al.

Solis v. CoverGirl Cosmetics et al. is a class action brought on behalf of consumers, alleging that CoverGirl marketed its beauty products as “safe for use” and “sustainable” when, in fact, they contain harmful and carcinogenic PFAS chemicals.[41] Yeraldinne Solis, a California consumer, alleged that consumers who purchase CoverGirl’s TruBlend Pressed relied on this advertising and believed the products were safe, but that the advertising was misleading.[42]

Judge Hamilton found that the lawsuit’s two main claims of economic injury: benefit-of-the-bargain and overpayment fail the Article II standing requirement[43], specifically that the plaintiff’s alleged injury must be concrete.[44] Class representative alleged that she expected a "safe" product but received one containing PFAS, which the court dismissed because the product's labeling did not claim safety and disclosed PTFE.[45] Her overpayment theory was also rejected, as the label listed PTFE and she acknowledged PFAS as toxic.[46] Consequently, the court found she did not sufficiently demonstrate a concrete economic injury, leading to the dismissal for lack of subject-matter jurisdiction.[47]

Case Study: Lewis v. Rodan & Fields, LLC

Nine plaintiffs have filed a consolidated class action against Rodan for allegedly failing to disclose serious side effects associated with its Lash Boost eye serum, specifically linked to the ingredient isopropyl closprostenate (ICP), a synthetic prostaglandin analog.[48]

Each plaintiff experienced significant adverse effects after using the product, such as changes in eye color and vision problems.[49] Despite previous FDA warnings regarding similar products violating the Food, Drug, and Cosmetic Act, Rodan's warnings were deemed insufficient and misleading.[50] The plaintiffs claim that had they been properly informed about the potential risks, they would not have purchased the product, asserting nineteen causes of action under various state laws and the federal RICO statute.[51]

The court denied defendant's motion to dismiss with respect to causes of action one through nineteen and granted with respect to cause of action twenty[52] First, the court concluded that the plaintiffs adequately alleged a false advertising claim based on the defendant's failure to disclose potential side effects of a product containing ICP.[53] The court noted that, while focusing on California's false advertising laws, the plaintiffs' allegations also supported claims under the statutes of Florida, Illinois, New York, Massachusetts, and Washington.[54] Second, the court dismissed the plaintiffs’ RICO claim with prejudice, finding they failed to adequately allege the existence of an enterprise.[55] The court emphasized that the plaintiffs' claims regarding independent contractors or consultants did not demonstrate the necessary common purpose or structure required for a RICO enterprise, as these relationships were characterized as ordinary business transactions.[56]

Conclusion

The beauty industry operates within a complex legal landscape that influences not only product safety and formulation, but also marketing strategies and consumer perceptions. The notable differences between U.S. and EU regulations regarding banned ingredients raise critical questions about consumer protection and regulatory adequacy in the U.S.

As brands navigate these challenges, understanding intellectual property rights and adhering to advertising regulations will be essential for success. Ultimately, the interplay of law, innovation, and consumer awareness continues to shape the evolving narrative of the beauty sector.

[1] McKinsey & Co., The Beauty Market in 2023: A Special State of Fashion Report (2023), https://www.mckinsey.com/industries/retail/our-insights/the-beauty-market-in-2023-a-special-state-of-fashion-report.

[2] Id.

[3] Michelle K. Lee, Is Our Identity Connected to Our Taste?, Beauty Matter (Mar. 14, 2023), https://beautymatter.com/articles/is-our-identity-connected-to-our-taste.

[4] Tom Arno & Loni Morrow, Intellectual Property (IP) Basics for Beauty Entrepreneurs, Global Cosmetic Industry (Jan. 11, 2018), https://www.gcimagazine.com/brands-products/news/article/21848558/intellectual-property-ip-basics-for-beauty-entrepreneurs.

[5] Id.

[6] Id.

[7] Id.

[8] Copycat Eye: Copyright Protection in the Beauty Industry, FashionUnited (Jan. 3, 2019), https://fashionunited.com/news/business/copycat-eye-copyright-protection-in-the-beauty-industry/2019010325367/.

[9] Id.

[10] 20+ Reasons Beauty Companies Should Care About Intellectual Property, Goodwin (Sept. 20, 2022), https://www.goodwinlaw.com/en/insights/publications/2022/09/09_20-3-reasons-beauty-cos.

[11] Id.

[12] Islestarr Holdings Ltd. v. Aldi Stores Ltd., [2022] EWHC 2843 (Ch).

[13] Id.

[14] William Fry, Can You Copyright a Powder? Charlotte Tilbury Wins Over Look-Alike Contender from Aldi, https://www.williamfry.com/knowledge/can-you-copyright-a-powder-charlotte-tilbury-wins-over-look-a-like-contender-from-aldi/ (last visited Oct. 27, 2024).

[15] Id.

[16] Carell v. Shubert Org., Inc., 104 F. Supp. 2d 236, 241 (S.D.N.Y. 2000).

[17] Id. at 241-242.

[18] Id. at 241.

[19] Id.

[20] Id. at 271.

[21] Id.

[22] Id. at 272.

[23] U.S. Food and Drug Administration, FDA Authority Over Cosmetics: How Cosmetics Are Not FDA Approved, But Are FDA Regulated, FDA https://www.fda.gov/cosmetics/cosmetics-laws-regulations/fda-authority-over-cosmetics-how-cosmetics-are-not-fda-approved-are-fda-regulated (last visited Oct. 19, 2024).

[24] Id.

[25] Id.

[26] Id.

[27] Id.

[28] European Commission, Cosmetics Legislation, https://single-market-economy.ec.europa.eu/sectors/cosmetics/legislation_en (last visited Oct. 19, 2024).

[29] Id.

[30] Id.

[31] PlusChem, EU and US Cosmetic Regulations (accessed Oct. 19, 2024), https://pluschem.com/blog/eu-and-us-cosmetic-regulations/.

[32] Id.

[33] Byrdie, Formaldehyde in Beauty Products, https://www.byrdie.com/formaldehyde-in-beauty-products-5100925 (last visited Oct. 27, 2024).

[34] Campaign for Safe Cosmetics, Hydroquinone, https://www.safecosmetics.org/chemicals/hydroquinone/ (last visited Oct. 27, 2024).

[35] CosmeticsDesign-Europe, Parabens in Beauty Products: EU Law, https://www.cosmeticsdesign-europe.com/Article/2023/12/13/parabens-in-beauty-products-eu-law (last visited Oct. 27, 2024).

[36] SkinConsult, Differences in U.S. and EU Cosmetics Regulation, https://skinconsult.com/en/blog/differences-us-eu-cosmetics-regulation/ (last visited Oct. 27, 2024).

[37] Id.

[38] Id.

[39] Federal Trade Commission, Advertising and Marketing, https://www.ftc.gov/business-guidance/advertising-marketing (last visited Oct. 27, 2024).

[40] Federal Trade Commission, Penalty Offenses, https://www.ftc.gov/enforcement/penalty-offenses (last visited Oct. 27, 2024).

[41] Yeraldinne Solis v. CoverGirl Cosmetics et al., No. 22-cv-0400-BAS-NLS (S.D.Cal. March 7, 2023).

[42] Id. at 4.

[43] Id. at 11.

[44] A “concrete” injury must be “de facto”; that is, it must actually exist. Spokeo, Inc. v. Robins, 578 U.S. 330, 340, 136 S. Ct. 1540, 1548 (2016).

[45] Id. at 12.

[46] Id. at 15-19.

[47] Id. at 10.

[48] Lewis v. Rodan & Fields, LLC, No. 18-cv-02248-PJH, 2019 U.S. Dist. LEXIS 32470, at 3 (N.D. Cal. Feb. 28, 2019).

[49] Id.

[50] Id. at 5.

[51] Id.

[52] Id. at 13.

[53] Id. at 10.

[54] Id.

[55] Id. at 10.

[56] Id. at 11-12.