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Former Obagi Medical Products majority shareholder sues

Executive Summary

ZO Skin Health Inc. has filed suit in California Superior Court against Obagi Medical Products, alleging anti-competitive practices. ZO founder Dr. Zein Obagi says OMP, which markets prescription-only skin care, is preventing ZO from marketing a new non-prescription anti-aging skin-care line, citing non-compete clauses. Obagi, a dermatologist, founded Worldwide Products Distribution Inc. in 1988, which would later "form the core" of prescription skin care pharmaceutical firm OMP. In 1997, Obagi sold a controlling share in OMP to a private equity firm, which took the company public. According to a release from Del Mar, Calif.-based ZO, Obagi offered OMP the option to market and distribute his new line, but the firm declined. OMP then "engage[d] in a far-reaching and legally improper campaign" to prevent the line's sale, and also stopped the sale of ZO to a Japanese pharmaceutical firm, claiming it would violate a non-compete clause. However, ZO maintains that clause is unenforceable
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