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Diane von Furstenberg Wins Bid to Block Discount Sales

Diane von Furstenberg Studio LP won a court order prohibiting a distributor from selling the luxury brand’s inventory to discount retailers.

ID Beauty International Distribution Ltd. can’t sell any licensed DVF products to TJX Cos.’ TJ Maxx and Marshalls or to Overstock.com Inc. (OSTK), Delaware Chancery Judge J. Travis Laster said yesterday in a ruling. The judge lifted a broader temporary restraining order against ID Beauty in favor of the narrow injunction.

ID Beauty’s license agreement required it to consult DVF about any retail channel less prestigious than specialty and high-end retailers such as Saks Inc. (SKS) and Nordstrom Inc. (JWN) Such consultation never occurred, DVF argued. Laster’s order allows ID Beauty to continue selling licensed products in compliance with the agreement.

“We are very satisfied that the Chancery Court judge overruled any product recall and that our sales are still permitted to most authorized retailers,” Alexandre Cukier, London-based ID Beauty’s president and chairman, said in a statement.

Diane von Furstenberg, based in New York, terminated a license agreement with ID Beauty last month and sued the distributor for allegedly destroying the value of its brands by selling DVF products at deep discounts.

The injunction is in effect until there is a trial on the merits or a decision by an arbitration panel. The two companies have been in arbitration before the International Chamber of Commerce.

The case is Diane von Furstenberg Studio LP v. ID Beauty International Distribution Ltd., CA8097, Delaware Chancery Court (Wilmington)

To contact the reporter on this story: Sophia Pearson in Philadelphia at spearson3@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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