On September 29, 2009, Mary Kay Inc. had a significant trial court victory against an unauthorized reseller of Mary Kay products. The case (please see attached court documents) centered on Amy Weber, a former Mary Kay Independent Consultant and her husband (defendants), who began selling Mary Kay products via the Internet. Despite repeated requests by Mary Kay Inc. not to use the Mary Kay name or corporate image, the defendants continued to do so through eBay stores, “MaryKay1Stop” and “Touch of Pink,” as well as a Web site, “touchofpinkcosmetics.com” on which they sold and later resold Mary Kay products including some that were passed their expiration dates.

A jury found that the defendants had violated several provisions of the Lanham Act including: unfair competition, passing off, and trademark infringement. Additionally, the jury found that the defendants also engaged in unfair competition and trademark infringement under Texas common law. In a Memorandum Opinion and Order pursuant to the jury’s finding, the Court awarded Mary Kay Inc. $1,139,962, plus post-judgment interest.

The Court also enjoined the defendants from “future acts of infringement, unfair competition, and passing off.” While primarily based on issues related to intellectual property law, several aspects of the Court’s Opinion and Order may nonetheless be of special interest to direct sellers.

Limitation on the Former Direct Sellers’ Use of the Company’s Trademark

The jury found that the defendants (former Mary Kay Independent Beauty Consultants and direct sellers) operated their business in a way that caused confusion about their affiliation with Mary Kay. Correspondingly, the Court found that allowing the defendants to operate their business in this way left Mary Kay powerless to control its image and concluded that, without an injunction, Mary Kay would suffer irreparable harm (p.9). Accordingly, the former direct sellers were enjoined from any activity that would suggest that they were endorsed by, sponsored by or otherwise affiliated with Mary Kay, including the promotion, advertising, sale, or distribution of products using names otherwise controlled or protected by Mary Kay (e.g. “TouchofPink.com”) Additionally, the defendants could not offer, sell, or distribute Mary Kay products that were beyond their shelf life or expiration date (p. 11). Notably, the Court did not issue a “broad ban” on the sale by defendants of any Mary Kay product (p.22). The defendants were prohibited from using Mary Kay’s product descriptions.

Former Direct Sellers Prohibited from Representing Past Relationship with Company

In order to show that there was no relationship between the defendants and Mary Kay, the Court held that the defendants were prohibited from representing that they were former Mary Kay consultants. The Court concluded that “as authorized by the ‘safe distance’ rule, it is wise to discourage the suggestion of any relationship between Mary Kay and the defendants, even one that has long since expired (p.19-20).”

The Court also enjoined the defendants from representing to consumers that Touch of Pink provides “a place for consultants and consumers to locate hard to find and retired product or even new Mary Kay items at a great discount.” The court found “any use of the words “Mary Kay,” without an explanation that the defendants are not Mary Kay and have no affiliation with Mary Kay, is suspect (p.23).

References to Other Consultants or the Company’s Buyback Policy Prohibited

The defendants were prohibited from suggesting that Mary Kay consultants could be contacted for non-expired products, or that the defendants’ operation carried unused products from Mary Kay consultants. The defendants were also prohibited from representing to consumers and Independent Beauty Consultants that “if your product is less than 12 months old, you can send them back to Mary Kay Inc. for 90% of wholesale.”

Purchase of Internet Search Terms by Defendants not Enjoined

The Court held that the defendants were not barred from purchasing the words “Mary Kay” as a search term from search engines such as Google and Yahoo (p.22). However, the Court went on to hold that “any use of the Mary Kay mark must solely exist for the sole purpose of informing customers that the defendants, as entities entirely separate and distinct from Mary Kay, offer Mary Kay products for sale (p.23).”