Diane von Furstenberg Studio LP sued a former distributor claiming it is selling the luxury brand’s inventory too cheaply to discounters such as TJ Maxx, Overstock.com Inc. (OSTK:US) and Marshalls.
Von Furstenberg terminated a license agreement with London- based ID Beauty International Distribution Ltd. on Nov. 5. The distributor has since then disregarded its demands to cease sales of formerly licensed products, according to the complaint, which seeks a temporary restraining order until an arbitration panel can hear the case.
“ID Beauty’s malfeasance has not only destroyed the value of the fragrance brands, it also is spilling over to DVF’s core luxury ladies’ clothing and footwear brands,” lawyers for DVF said in the complaint filed today in Delaware Chancery Court.
Chancery Court Judge J. Travis Laster granted the request for a temporary injunction, Michael Kelly, an attorney for DVF with McCarter & English LLP, said in an e-mail.
Diane von Furstenberg, who introduced her iconic wrap dress in 1972, is widely considered one of the greatest apparel designers active today, according to the complaint. The company’s products, including accessories and apparel, is sold at specialty and high-end retailers such as Saks Inc. (SKS:US) and Nordstrom Inc. (JWN:US)
ID Beauty’s license agreement required the company to consult DVF for any retail channel less prestigious than the high-end space, according to the complaint. Lawyers for DVF said such consultation never occurred before ID Beauty sold products in Canada and the U.S. to mass market retailers, including TJX Cos. (TJX:US), the owner of TJ Maxx and Marshalls, without honoring a six-month exclusivity period of sale to specialty and high-end retailers.
ID Beauty sold DVF’s fragrance Love Diane to TJ Maxx and Marshalls before the October 2012 date it would have been available to first-tier stores, according to the complaint.
ID Beauty continued to sell products after the termination of the license agreement and failed to remove references to DVF and von Furstenberg from its websites and marketing literature, according to the complaint.
“I don’t think we are going to comment,” Armineh Lascu, ID Beauty’s vice president of sales, said in a telephone interview.
The case is Diane Von Furstenberg Studio LP v. ID Beauty International Distribution Ltd., CA8097, Delaware Chancery Court (Wilmington).
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