Remember Those Lawsuits Against MK Liquidators I Mentioned in December?

You surely remember my post on December 6, 2008 regarding the fact that Mary Kay Inc was targeting online resellers of Mary Kay products with lawsuits.

As you know, I take seriously the privacy of the sources of my information. Unless they give me permission to name them, I don’t and don’t want to.

Unfortunately, one of the impending lawsuits I was informed of personally became public with its official filing in late November 2008.

The lawsuit against Mary Kay Inventory Liquidators Sharon & Dennis Lilly is similar to the lawsuit against Touch of Pink.

Sharon Lilly became a Mary Kay consultant in January of 2006. Mary Kay Inc alleges that Ms. Lilly was advertising and selling Mary Kay products online and sent her a letter demanding she stop. When she didn’t, MK terminated her consultant agreement on May 17, 2006. Apparently that’s when Sharon Lilly opened her online store, www.sharonscosmeticshoppe.com

However, according the the complaint filed, Sharon’s husband Dennis signed up to be a Mary Kay consultant on May 26, 2006, allegedly so Sharon could continue buying MK products at a discount. It took Mary Kay Inc nearly two years to figure this out: they didn’t terminate Mr. Lilly’s consultant agreement until April 30, 2008. Now, Mary Kay Inc calls Mr. Lilly’s act of signing up as a consultant “fraud” which is pretty strong language.

The main accusation in the lawsuit against the Lillys is that they interfere with Mary Kay Inc’s business model by soliciting consultants to sell their product to them, the Lillys, rather than an actual “end user,” as they claim Touch of Pink does as well.

Mary Kay Inc also claims unlawful use of their trademarks and that the defendants confuse consumers into thinking that they are purchasing guaranteed Mary Kay products from an “authorize” Mary Kay consultant. But how confused do you need to be to think you’re buy from a Mary Kay consultant when the Lillys’ site clearly displays a disclaimer that they aren’t affiliated with Mary Kay cosmetics?  (Hint: pretty darn confused. Step away from the TimeWise.)

So far, the Lilly’s have been subpoened and we await their depositions and the continuing proceedings in this case.

Like I told you in December, Mary Kay Inc is apparently going after the Inventory Liquidators online, whether they’re selling on eBay or from the own site. No doubt other lawsuits will be formally filed in the future.

Here’s the entire lawsuit filed against the Lillys for your reading enjoyment:

Mary Kay Inc., Plaintiff  v. Sharon K. Lilly and Dennis C. Lilly, Defendants 

Please note that the lawsuit document is over 2 MB — it’s large, so it will take a few extra moments to download and appear on your computer.

Why Didn’t Mary Kay Inc. Warn Liquidators Before Suing?

Why is it that instead of issuing a “cease and desist” order or a similar warning to the people selling on eBay, that Mary Kay Inc. just went ahead and filed lawsuits against these sellers?

Why didn’t they give these people a chance to stop their selling if they wanted to?

Why didn’t Mary Kay Inc. use the VERO program set up by eBay to address the alleged violations of their trademark and copyright? If sellers were violating these guidelines, set up to protect companies, then Mary Kay Inc. can simply file notice with eBay and the offending listings are removed. Apparently what Mary Kay Inc. is alleging is beyond VERO. If sellers aren’t using copyrighted or trademarked material or images in their listings and not trying to sell counterfeit products, then there isn’t much to dispute with eBay.

But instead of giving these sellers a warning, Mary Kay Inc. brought down the hammer.

If Mary Kay Inc. discovers that their active consultants and directors are selling products to those who then sell it on eBay, then what? Do they terminate those consultants and directors? Do those people then become examples, used to scare future recruits into behaving?

And what responsibility do those buying excess inventory for resell have to check out the person selling it to them? If there were an underground counterfeit TimeWise factory, maybe that would be reasonable. But as it is, all they know is that it is someone who was probably at one time in Mary Kay. Why should those sellers be required to find out if that person is active? Mary Kay Inc. can claim that by purchasing inventory from their active consultants that resellers are interfering with their business. But actually…they may be helping MK’s business: after all, with more room on their shelves, these consultants can now buy more merchandise directly from the company and keep the inventory loading machine rolling.

It will be interesting to see how this all plays out, no question.

Another Liquidator Sued by Mary Kay Inc.

I just received an email from yet another Mary Kay inventory liquidator that they were served with a lawsuit on Monday. This person has been selling on eBay and her own online store since 2000.

It’s apparent that Mary Kay Inc. is going after anyone who is selling Mary Kay products on eBay and in an online store.

If you sell Mary Kay products on eBay or online, beware! Mary Kay Inc. is on a mission to get rid of you.

PinkLighthouse will keep you informed on how this proceeds.