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Trading Secrets A Law Blog on Trade Secrets, Non-Competes, and Computer Fraud

Fashion Designer Resolves “Preppy Clothing” Trade Secrets Dispute

Posted in Trade Secrets

In November 2012, we first blogged on the high profile trade secret dispute between Tory Burch, creator of the fashion line Tory Burch LLC, and her ex-husband, J. Christopher Burch.

In October 2012, Christopher Burch filed a breach-of-contract and tortious interference complaint against his ex-wife in which he alleged that his “ex-wife hijacked the bidding process for his 28 percent stake in the New York-headquartered luxury sportswear company the couple founded in 2003, when they were still married.” In response, Tory Burch filed counterclaims in early November, in which she accused Christopher of stealing trade secrets to establish stores which looked suspiciously like her own boutiques.

In late December 2012, the lawsuit officially settled, following the announcement that merchant bank BDT Capital Partners LLC (“BDT”) and private equity firm General Atlantic LLC (“General Atlantic”) would each purchase a minority stake in Tory Burch LLC. As part of the sale, Christopher Burch agreed that he would drop his lawsuit, Tory Burch, who retains a 28 percent share in the company, also agreed to drop her countersuit.]

The exact terms of the acquisition are unknown, and the parties did not disclose how much either BDT or General Atlantic would pay for their stakes in the company, nor the size of either company’s share. Nor is it clear whether the acquired shares will come directly from Christopher Burch’s shares of the company. Tory Burch did reveal that Christopher “will retain at least some of his stake in the business.”

In a joint statement, Tory Burch stated, “We are thrilled to have BDT Capital Partners and General Atlantic join us as partners. They are completely aligned with our long-term approach to building our brand and share our vision for growth globally.” Christopher Burch agreed, stating, “I am pleased to see the company complete this milestone transaction. I am confident in its continued success, and I look forward to remaining a significant investor.”

Now that the legal dispute is history, many industry insiders believe that the next logical step for Tory Burch LLC is an IPO. Several media reports suggest a public offering may be in the pipeline, and Bloomberg analysts estimate market valuation may top $3.4 billion. Whether this plays out remains to be seen, but now that the legal dispute is out of the way, things are clearly looking up for Tory Burch LLC.