ZO Health Files Suit Against Obagi Medical Products

ZO Skin Health, Inc., the Beverly Hills, CA company that sells non-prescription skin care products created by Dr. Zein Obagi, has filed suit in California Superior Court challenging the anti-competitive practices of Obagi Medical Products, Inc. (OMP), a company the dermatologist founded and of which he still remains a shareholder.

In the lawsuit, ZO Skin Health claims OMP has engaged in a wide range of unlawful activities to prevent ZO from providing the general consumer market with access to anti-aging skin care products invented by Dr. Obagi.

Dr. Obagi founded Worldwide Products Distribution, Inc, the company that would later form the core of Obagi Medical Products. In 1997, he sold a controlling share in OMP, which sells medical skin-care products to physicians, to outside investors. OMP has since become a public company, of which Dr. Obagi remains the second-largest shareholder.

ZO Skin Health’s lawsuit asserts that Dr. Obagi first gave OMP the opportunity to market his new consumer product line. According to ZO, after a lengthy discussions in which Dr. Obagi shared highly confidential information, OMP declined to pursue the products. Instead, ZO distributed Dr. Obagi’s new consumer product line. In addition, Dr. Obagi says ZO was formed with OMP’s knowledge and expressions of support, according to the company.

ZO Skin Health products are available at selected Nordstrom stores and department stores, resort, destination and day spas.

ZO said its goals in filing this lawsuit are to halt OMP’s illegal campaign against ZO, to permit ZO’s new products to be widely distributed to consumers without threats and wrongful interference, and just compensation. In addition, ZO claims that OMP wrongfully scuttled its sale to a major Japanese pharmaceutical company.

In a press statement, OMP said it is in the process of reviewing the allegations contained in the complaint and in the demand for arbitration and intends to vigorously defend itself against these claims.