Patrick Ta Beauty’s CVS Lawsuit Tests the Gray Market

By Rebecca Stone

Last month, indie makeup brand Patrick Ta Beauty sued CVS and Canadian distributor Akstrom over what it calls the “unauthorized” sale of its cosmetics in CVS’s newly launched off-price section, “fresh beauty finds,” according to Glossy.

The case centers on product diversion, which Glossy describes as the trade of authentic goods through unintended or unauthorized channels. Patrick Ta Beauty wants the return and destruction of CVS promotional materials, according to lawyer Julie Zerbo’s discussion of the claims.

CVS and Patrick Ta Beauty declined to comment on the lawsuit. Akstrom did not reply to Glossy’s request for comment.

What remains unresolved?

Glossy says the early lawsuit leaves three central questions unanswered:

• How did Akstrom obtain Patrick Ta Beauty products for CVS?
• Will CVS continue its intended sales of those products?
• How could the case affect beauty’s growing gray market?

Why does off-price expansion matter?

Glossy describes off-price as becoming a dominant retail channel for beauty and wellness. The publication links consumer demand for discounts with a potential financial benefit for brands: faster sales can provide needed cash.

TJX, which operates TJ Maxx, Marshalls and Home Goods, grew revenue by 3.95% in 2025 to reach net sales of $56 billion, according to Glossy. For scale, the same report says CVS generated $400 billion in revenue during fiscal 2025.

Glossy calls “fresh beauty finds” a CVS strategy to increase revenue through competitive categories as the brick-and-mortar pharmacy retailer faces industry challenges.

What does the lawsuit mean for authorized sales?

The lawsuit features in an episode of the Glossy Beauty Podcast about legal cases affecting fashion and beauty. Host Lexy Lebsack speaks with Zerbo, a lawyer, legal analyst and founder of The Fashion Law, and Ian Ginsberg, president of the Greenwich Village apothecary C.O. Bigelow Chemists and distribution arm Bigelow Trading.

Bigelow Trading encompasses C.O. Bigelow’s private beauty line and a USA wholesale distribution arm that imports brands such as Marvis toothpaste for sale across domestic retailers, according to Glossy. The episode is available through Apple Podcasts and Spotify.

Zerbo said Patrick Ta Beauty wants the CVS promotional materials returned and destroyed. She qualified the brand’s position by pointing to CVS’s own legal review:

“What’s interesting about CVS is they have sophisticated legal counsel that appear [to have] cleared this [sale of Patrick Ta Beauty in its stores]. … But, you know, counsel at CVS, in theory, cleared all of this, so it’s not necessarily as straightforward as Patrick Ta Beauty’s allegations, and it rarely is, right?”

Zerbo also raised a possible contract issue involving LVMH-owned Sephora. She suggested Sephora might have contacted Patrick Ta Beauty over a term stating that Sephora was the only seller of its products. Zerbo framed that scenario as a possibility rather than a confirmed event.

How did product diversion become normal?

Ginsberg, who has worked in the industry for 40-something years, described diversion as a longstanding practice rather than a CVS-era anomaly.

“Diversion has been around since the beginning of time. I mean, I’ve been in this business 40-something years.”

According to Ginsberg, diversion was prominent in the 1980s and 1990s, when professional shampoos, professional hair care and fragrances appeared in drug chains and stores including Target, CVS and Walmart. He described three recurring routes:

• Collectors went door to door to hair salons, accumulated professional products and sold them to retail chains, Ginsberg said.
• Large fragrance companies sometimes cleared inventory near year-end, sought cash or changed ingredients, packaging or labels, according to Ginsberg.
• Sales representatives sometimes approved whole loads and assured suppliers not to worry before the goods disappeared, Ginsberg said.

Ginsberg said the practice has involved both brand and retail sides, describing diversion as a feature of the industry for decades.

For Patrick Ta Beauty, CVS and Akstrom, the immediate question is whether the disputed cosmetics stay on shelves while the supply chain and legal clearance are examined; for the market, the case will test how much control brands can keep over off-price sales.