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Chancery Grants Injunction Under the Delaware Deceptive Trade Practices Act

Next Level Ventures, LLC v. AVID USA Technologies LLC, C.A. No. 2022-0699-MTZ (Del. Ch. March 16, 2023)
The Delaware Deceptive Trade Practices Act (the "DDTPA”), 6 Del. C. § 2531, et seq., prohibits confusing or creating misunderstanding as to "the source, sponsorship, approval, or certification of goods or services" as well as to the products' “affiliation, connection, or association with, or certification by, another." In this case, the plaintiff asserted violations of the DDTPA in connection with the defendants' allegedly misleading statements. This decision grants the injunction against all defendants but narrows it to fit the specific allegations. 

In this case, the parties entered into a Distribution Agreement, which gave Plaintiff exclusive licensing rights to market and sell the trademarked vaporization device components. Plaintiff later claimed that the defendants set up another company with the same name to circumvent the Distribution Agreement and sell the products through the new company's website. Plaintiff alleged violations of DDTPA based on the contentions that Defendants made misleading posts stating that Plaintiff was no longer a lawful distributor of the products. Plaintiff sought an injunction to ultimately prevent Defendants from marketing and selling the products under the trademark on the new company's website. According to DDTPA, deceptive trade practices include disparaging "the goods, services, or business of another by false or misleading representation of fact." The Court found that Plaintiff met all the elements necessary to obtain a preliminary injunction. Plaintiff demonstrated sufficient likelihood that it will prevail on its DDTPA claims against the new company, that it is likely to suffer imminent irreparable harm absent a preliminary injunction, and that the equities favor the issuance of an injunction. The Court noted, however, that the injunction Plaintiff sought was too broad and needed to be narrowed to address only those issues that were briefed - the misleading statements about Plaintiff. The Court found that Plaintiff did not demonstrate any marketing or selling of the products in violation of the Distribution Agreement. Finally, the Court found that Individual Defendants were de facto managers of the new company, which was a Delaware limited liability company, and therefore the injunction extended to them. 

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