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Dispute between New Jersey company and Victoria’s Secret heats up

Contracts are an important part of almost every business in New Jersey. They help sell products, bring in money and set the operating rules for business. Contract disputes, on the other hand, can have the opposite effect on business. Without the right guidance, they can be time-consuming as well as expensive, and can stop business. In many cases a contract dispute can even lead to litigation.

It appears that for one New Jersey company, a contract dispute has done just that. Zephyrs, located in New Jersey, supplies Italian-made hosiery to larger businesses to sell. The company recently sued retailer Victoria’s Secret and its parent company Limited Brands Inc.

According to Zephyrs, it had written contracts with Victoria’s Secret to sell high-end stockings. However, the company claims that Victoria’s Secret broke these contracts in 2001. Instead of selling Zephyrs Italian stockings, Victoria’s Secret replaced them with cheaper, knockoff Canadian-made stockings. Furthermore, Zephyrs claims that Victoria’s Secret kept the packaging the same, except for the made in Italy language, to mislead consumers.

Recently, Zephyrs filed suit for breach of contract and unfair competition in an Ohio court. The company is seeking $15 million in damages. In addition to the monetary damages, Zephyrs would like to recall several styles of the stockings that were sold in the misleading packaging.

Companies like Zephyrs can often prevent such knockoffs, which are a form of intellectual property infringement, through copyright laws or by applying for design patents. Copyright and design patents generally have the same requirements, including clear graphics of the design, though damages for patent infringements can be higher,

This case is likely to continue for some time as it works its way through the courts. If the parties are able to come together, settlement may be possible. Settlement can be a cost-effective way to settle disputes with business contracts. It often allows parties to come to mutually agreeable terms and move forward with their business relationship.

Source: JD Journal, “Victoria’s Secret in Hosiery Lawsuit,” Aug. 29, 2012

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