IP Law Daily, TRADE SECRETS—D. Del.: DTSA lawsuit by automotive shipping broker against competitor survives motion to dismiss, (Nov 14, 2025)

By Carolin Dennis, B.Sc., LL.B., LL.M.

An automotive shipping broker’s claim for trade secret misappropriation under DTSA survived dismissal because it was plausibly alleged that its competitor founded by its former employees possessed trade secrets in the identities and contact information of potential customers.

The U.S. District Court for the District of Delaware granted in part and denied in part an automotive shipping broker Navi Transport Services LLC’s motion to dismiss claims for trade secret misappropriation filed by its competitor, Montway LLC. Montway adequately alleged misappropriation of trade secrets under the federal Defend Trade Secrets Act (DTSA) in connection with Montway’s customer leads and contact information, but not in the company’s price quotes. The district court, however, dismissed Montway’s claims under the Delaware Uniform Trade Secrets Act (DUTSA) because none of the alleged misappropriation occurred in Delawre. Additionally, Montway stated a claim against Navi for false advertising under the Lanham Act (Montway LLC v. Navi Transport Services LLC, No. 1:25-cv-00381-SB (D. Del. Nov. 12, 2025)).

Background. Montway LLC (Montway) one of the nation’s leading automotive shipping brokers. Montway is organized in Delaware and headquartered in Illinois, but it runs a fully owned subsidiary, MDG EOOD, out of Bulgaria. MDG EOOD is a “servicing entity” that employs and runs Montway’s sales department. Montway found that two of its former employees, Ivan Karakostov and Radion Tzakov, founded a competitor, Navi Transport Services LLC (Navi). With limited funds and no marketing budget, Navi allegedly resorted to poaching Montway’s potential customers. Montway and MDG EOOD sued Navi, Karakostov, and Tzakov (collectively, defendants) alleging that all the defendants had violated the federal DTSA and the DUTSA, and that Navi had violated the federal Lanham Act’s ban on false advertising. The defendants moved to dismiss for failure to state a claim. They also moved to dismiss MDG EOOD as a plaintiff for lack of standing.

Trade secret misappropriation claim. Montway claimed that Navi misappropriated various trade secrets by using its confidential information to steal potential customers. Montway also asserted DTSA claims against Karakostov and Tzakov. To prevail on a claim for misappropriation of trade secrets under the DTSA Montway must allege (1) a trade secret (2) connected to interstate commerce (3) that defendants misappropriated. Montway claimed that it has taken various measures to keep its leads, customer contact information, and price quotes secret, including by training its employees about the confidential nature of that information, maintaining internal policies and procedures that instruct employees on appropriately using and safeguarding it, and imposing electronic safeguards to protect and limit access to it. The district court noted that those actions suffice for Montway to assert trade-secret protection in the leads and contact information. However, Montway did not take reasonable measures, or any measures at all, to keep its quotes secret. To the contrary, its very business model requires publishing its quotes.

According to the complaint, brokers like Montway and Navi are middlemen. When a potential customer reaches out, they provide the customer a quote and then post an anonymized version of the quote to the load board. If the price is right, a transport company will accept the job and the broker will take a cut. If the quote was not anonymized on the load board, a competing broker could reach out to the customer and undercut the quoted price. Thus, the secrecy of a potential customer’s identity and contact information creates economic value for an individual broker. Montway asserted that Navi gets the identities and contact information of prospective Montway customers through current Montway employees, sends an unsolicited lower bid to a prospective customer, and causes him to decline Montway’s bid and contract with Navi instead. The district court found that Montway has satisfied the latter two elements, but only partially satisfied the first. Accordingly, the district court let Montway’s DTSA claim to proceed against Navi as far as it asserts trade secrets in the identities and contact information of potential customers who submit quote requests on Montway’s website.

The district court also found that the facts in the complaint support an inference that Karakostov and Tzakov are personally responsible for acquiring Montway’s trade secrets given Karakostov’s position as a salesman and eventually as a Senior Sales Operations Manager at Montway. Tzakov also worked at Montway as an “Account Manager,” for nearly three years where he enjoyed access to Montway’s commercially sensitive information. Karakostov and Tzakov also approached a Bulgarian law firm to help them set up a Bulgarian entity to compliment Navi’s existing U.S. operation. Further, the facts in the complaint also support an inference that Karakostov and Tzakov knew that Navi’s leads had been gained through improper means. As former Montway employees, both of them were aware of Montway’s confidentiality policies, which would have barred current employees from sharing customer leads with Navi. Therefore, the district court allowed Montway’s DTSA claim to proceed against Karakostov and Tzakov to the extent that the claim asserts trade-secrets protection in Montway’s leads.

In addition to its DTSA count, Montway asserted a parallel count under the DUTSA. The district court noted that the DTSA and DUTSA are substantively identical. However, the DUTSA requires that “the misappropriation happened” in Delaware. If the misappropriation happened in another state or country, the DUTSA does not apply. Montway asserted that Navi is both registered in Delaware and has its principal place of business there, so Navi misappropriated its trade secrets in Delaware. However, the only two Navi employees referred to in the complaint are Karakostov and Tzakov, and they resided in Bulgaria during the relevant period, and the effects of the misappropriation were most likely felt in Illinois (where Montway is headquartered) and Bulgaria (where MDG EOOD is headquartered). Thus, the misappropriation seems to have happened in Bulgaria, or possibly Illinois. Further, the district court noted that Montway did not state a DUTSA claim against either Karakostov or Tzakov. Therefore, the district court dismissed the DUTSA claim against Navi, Karakostov, and Tzakov.

False-advertising claim. The Lanham Act broadly bans false advertising. To prevail on a false-advertising claim, a plaintiff must first assert that it has statutory standing to sue under the Act. It then must allege the substantive elements of the claim. To have standing to assert a Lanham Act claim, a plaintiff must show that it is within the “zone of interests” protected by the statute by asserting (1) “injury to a commercial interest in reputation or sales” that (2) is “proximately caused” by the defendant’s violation of the statute.

Montway asserted harm in the form of lost sales—the quintessential commercial injury. According to Montway, Navi’s website contains false information designed to create an appearance of legitimacy in the hopes of duping potential customers who it contacted by stealing Montway’s trade secret information. Next, Navi steals Montway’s customers by sending unsolicited, cheaper quotes to individuals who have asked Montway for quotes. Those individuals presumably go to Navi’s website after getting the unsolicited quote, see what appear to be positive reviews and statements about Navi’s experience shipping autos, and decide to do business with Navi instead of Montway. In other words, Navi allegedly targets Montway’s potential customers in particular. That satisfies proximate cause.

To make out a false-advertising claim, a plaintiff with standing must also plead: (1) that the defendant has made false or misleading statements as to his own product; (2) that there is actual deception or at least a tendency to deceive a substantial portion of the intended audience; (3) that the deception is material in that it is likely to influence purchasing decisions; (4) that the advertised goods travelled in interstate commerce; and (5) that there is a likelihood of injury to the plaintiff in terms of declining sales, loss of good will, etc. The district court found that Montway alleged enough facts to satisfy the first, third, fourth, and fifth elements. Accordingly, the district court Montway’s Lanham Act claim proceed against Navi.

The Case is No. 1:25-cv-00381-SB.

Judge: Bibas, S.

Attorneys: James L. Higgins (Young, Conaway, Stargatt & Taylor LLP) for Montway LLC d/b/a Montway Auto Transport and MDG Eood d/b/a Montway Bulgaria. Emily L. Skaug (BAYARD, P.A.) for Navi Transport Services LLC d/b/a Navi Auto Transport, Ivan Karakostov, and Radion Tzakov.

Companies: Montway LLC d/b/a Montway Auto Transport; MDG Eood d/b/a Montway Bulgaria; Navi Transport Services LLC d/b/a Navi Auto Transport

Cases: TradeSecrets DelawareNews GCNNews