Justia U.S. 4th Circuit Court of Appeals Opinion Summaries

A North Carolina software company initiated a lawsuit in the United States District Court for the Western District of North Carolina against its former business partner, a Dutch entity, after their business relationship dissolved. The plaintiff alleged copyright and trademark infringement, misappropriation of trade secrets, and various state law violations. Shortly after the complaint, the plaintiff obtained a preliminary injunction limiting the defendant’s business activities. Meanwhile, the defendant commenced related litigation in the Netherlands. During those Dutch proceedings, the defendant’s American attorney, Pressly Millen, submitted an affidavit that the plaintiff claimed misrepresented the scope and timing of the U.S. litigation.The Dutch court initially denied the plaintiff’s request to stay the Dutch proceedings, partly relying on representations from the defendant’s counsel. The plaintiff returned to the North Carolina court, seeking an order requiring the defendant to correct these alleged misrepresentations in the Dutch court. The district court ordered the defendant to submit both its order and a corrective statement to the Dutch court. The defendant submitted the order but did not file the separate corrective statement. Later, the Dutch court stayed its proceedings. The plaintiff then moved for contempt sanctions in the North Carolina court against the defendant and its attorneys for failing to comply fully with the correction order. Following a show cause hearing, the district court held the defendant and Millen in civil contempt, sanctioning Millen by suspending his ability to practice in the district, though not holding him jointly liable for monetary sanctions.On appeal, the United States Court of Appeals for the Fourth Circuit found that it had jurisdiction to review the contempt order against Millen, a nonparty. The appellate court held that the district court abused its discretion by imposing civil contempt sanctions on Millen without clear and convincing evidence that the plaintiff was harmed by Millen’s failure to submit the separate statement. The court vacated the civil contempt adjudication and sanction against Millen. View "Dmarcian, Inc. v. Millen" on Justia Law

An American software company based in North Carolina and a Dutch company entered into a business relationship that later soured. The American company alleged that the Dutch company stole its brand name, software code, and customer base. The Dutch company operated a website nearly identical to the American company’s, using its name, logo, and marketing materials, and targeted American customers, even convincing at least one U.S. company to switch providers. Disputes between the parties also led to reciprocal lawsuits in both the United States and the Netherlands, with overlapping subject matter.The United States District Court for the Western District of North Carolina initially issued a preliminary injunction against the Dutch company, finding the American company was likely to succeed on its copyright, trademark, trade secret, and tortious interference claims. After the Supreme Court’s decision in Abitron Austria GmbH v. Hetronic International, Inc. altered the standard for the extraterritorial application of the Lanham Act, the district court modified its injunction to comply with the new “conduct-focused” approach and dismissed the copyright claim. The district court also ordered the Dutch company to correct statements made to the Dutch court and later held the company in civil contempt for failing to comply fully, imposing a monetary sanction.The United States Court of Appeals for the Fourth Circuit reviewed the case. Applying the Supreme Court’s new guidance from Abitron, the Fourth Circuit affirmed the second amended preliminary injunction, holding that the Dutch company’s conduct constituted infringing use in U.S. commerce under the Lanham Act, and that the Defend Trade Secrets Act’s express extraterritorial provision was satisfied by acts in furtherance of misappropriation occurring in the United States. The court dismissed the appeals from the correction and contempt orders for lack of appellate jurisdiction. View "Dmarcian, Inc. v. DMARC Advisor BV" on Justia Law

Deque Systems Inc., a company specializing in web accessibility software, developed and registered multiple versions of its DevTools and Rules Help Pages products. To access these, users agreed not to copy, reverse-engineer, or otherwise misuse the software or its documentation. In 2021, BrowserStack, a competing firm, sought to develop its own accessibility testing tools. More than 100 BrowserStack employees created accounts with Deque—agreeing to Deque’s terms—and later, BrowserStack released an Accessibility Toolkit, which Deque alleged was developed by unlawfully copying and reverse-engineering DevTools and the Rules Help Pages.Deque filed suit in the United States District Court for the Eastern District of Virginia, claiming copyright infringement, false advertising, breach of contract, and unjust enrichment, and sought injunctive relief, damages, and other remedies. During discovery, Deque repeatedly failed to properly disclose its damages calculations and supporting evidence by the deadlines set in the court’s scheduling order. Despite several opportunities to supplement its disclosures and a late attempt to introduce expert testimony, Deque did not timely provide the required information. BrowserStack moved to exclude Deque’s damages evidence and for summary judgment. The district court granted these motions, finding that Deque’s noncompliance with disclosure rules was neither substantially justified nor harmless, and that Deque presented no evidence supporting injunctive or other relief.On appeal, the United States Court of Appeals for the Fourth Circuit reviewed and affirmed the district court’s judgment. The Fourth Circuit held that the district court did not abuse its discretion in excluding all evidence of Deque’s damages under Federal Rule of Civil Procedure 37(c)(1) due to repeated and unjustified failures to comply with disclosure requirements. The court also held that summary judgment for BrowserStack was warranted because Deque could not establish entitlement to injunctive, declaratory, or monetary relief. View "Deque Systems Inc. v. Browserstack, Inc." on Justia Law

The case concerns Frederick Allen, a videographer, and his company, Nautilus Productions, who documented the excavation of the Queen Anne’s Revenge, the sunken pirate ship of Blackbeard, off the North Carolina coast. Allen registered copyrights for many years of video footage he recorded during the recovery project. The State of North Carolina and its Department of Natural and Cultural Resources entered into agreements related to the salvage operation. Allen alleged that state officials infringed his copyrights by using his footage online and in state publications without permission, and that the state passed a law, N.C. Gen. Stat. § 121-25(b), which Allen argued authorized this infringement.The United States District Court for the Eastern District of North Carolina initially dismissed some claims but allowed Allen’s claims for declaratory judgment and copyright infringement to proceed, finding Congress had validly abrogated state sovereign immunity under the Copyright Remedy Clarification Act (CRCA). On appeal, the United States Court of Appeals for the Fourth Circuit reversed, holding that the CRCA did not validly abrogate state sovereign immunity, and the Supreme Court affirmed. Allen then voluntarily dismissed his remaining claims against the only non-governmental defendant, closing the case.Despite these rulings, the district court in 2021 allowed Allen to reopen the case, permitting him to amend his complaint based on a new constitutional theory stemming from United States v. Georgia, seeking as-applied, case-by-case abrogation of state sovereign immunity. In 2024, the district court denied sovereign immunity on this new claim, allowing it to proceed. The North Carolina defendants appealed.The United States Court of Appeals for the Fourth Circuit held that the district court abused its discretion in reopening the litigation under Rule 54(b) rather than Rule 60(b), where no extraordinary circumstances justified such relief. The appellate court reversed the order reopening the case, vacated the subsequent 2024 ruling as moot, and remanded with instructions to close the litigation and dismiss all claims against the North Carolina defendants with prejudice. View "Allen v. Stein" on Justia Law

A dispute arose from the design and installation of cabinetry in a luxury home in Charleston, South Carolina. Design Gaps, Inc., owned by David and Eva Glover, had a longstanding business relationship with Shelter, LLC, a general contractor operated by Ryan and Jenny Butler. After being dissatisfied with Design Gaps’ performance, the homeowners, Dr. Jason and Kacie Highsmith, and Shelter terminated their contract with Design Gaps and hired Distinctive Design & Construction LLC, owned by Bryan and Wendy Reiss, to complete the work. The Highsmiths and Shelter initiated arbitration against Design Gaps, which led to the arbitrator ruling in favor of the homeowners and Shelter on their claims, and against Design Gaps on its counterclaims, including those for copyright infringement, tortious interference, and unfair trade practices.After the arbitration, Design Gaps sought to vacate the arbitration award in the United States District Court for the District of South Carolina, but the court instead confirmed the award. Concurrently, Design Gaps filed a separate federal lawsuit against several parties, including some who were not part of the arbitration. The defendants moved to dismiss, arguing that res judicata and collateral estoppel barred the new claims, or alternatively, that the claims failed on other grounds such as the statute of limitations and laches. The district court agreed, dismissing most claims based on preclusion or other legal bars, and granted summary judgment on the remaining claims.The United States Court of Appeals for the Fourth Circuit reviewed the district court’s decisions. The court held that res judicata and collateral estoppel applied to bar most of Design Gaps’ claims, even against parties not directly involved in the arbitration but in privity with those who were. For the remaining claims, the court found they were properly dismissed on grounds such as the statute of limitations, waiver, or laches. The Fourth Circuit affirmed the district court’s judgment in full. View "Design Gaps, Inc. v. Distinctive Design & Construction LLC" on Justia Law

Jason and Kacie Highsmith hired Shelter, LLC to manage a home renovation project and later contracted with Design Gaps, Inc. to design and install cabinets and closets. The contracts required arbitration for disputes but did not specify completion dates. Design Gaps failed to meet multiple promised deadlines, leading the Highsmiths to terminate the contracts and hire another company. The Highsmiths shared Design Gaps' copyrighted drawings with the new contractor. They then filed for arbitration, alleging breach of contract and other claims, while Design Gaps counterclaimed for various issues, including copyright infringement.The arbitrator held a three-day hearing, during which the Highsmiths presented multiple witnesses, while Design Gaps only presented David Glover. The arbitrator found in favor of the Highsmiths, awarding them damages and attorney’s fees, and denied Design Gaps' counterclaims, including the copyright claim, citing fair use and lack of evidence for copyright registration.Design Gaps petitioned the United States District Court for the District of South Carolina to vacate the arbitration award, arguing the arbitrator disregarded the law and failed to issue a reasoned award. The district court denied the petition and confirmed the arbitration award, also granting the Highsmiths' motion for attorney’s fees.The United States Court of Appeals for the Fourth Circuit reviewed the case. The court dismissed the appeal, citing lack of federal jurisdiction based on the precedent set in Friedler v. Stifel, Nicolaus, & Co., which held that federal courts do not have jurisdiction over motions to vacate arbitration awards unless there is an independent basis for federal jurisdiction beyond the Federal Arbitration Act. The court concluded that the petition did not meet this requirement. View "Design Gaps, Inc. v. Shelter, LLC" on Justia Law

In this case, Sony Music Entertainment and numerous other record companies and music publishers sued Cox Communications, alleging that Cox's customers used its internet service to infringe their copyrights. The plaintiffs argued that Cox should be held accountable for its customers' copyright infringement. A jury found Cox liable for both willful contributory and vicarious infringement of over 10,000 copyrighted works owned by the plaintiffs and awarded $1 billion in statutory damages.The United States Court of Appeals for the Fourth Circuit held that Cox was not vicariously liable for its customers' copyright infringement because Cox did not profit from its subscribers’ acts of infringement, a legal prerequisite for vicarious liability. However, the court affirmed the jury’s finding of willful contributory infringement because Cox knew of the infringing activity and materially contributed to it.The court vacated the $1 billion damages award and remanded the case for a new trial on damages, holding that the jury’s finding of vicarious liability could have influenced its assessment of statutory damages. The court did not vacate the contributory infringement verdict. View "Sony Music Entertainment v. Cox Communications, Incorporated" on Justia Law

In this case, professional concert photographer Larry Philpot brought a copyright-infringement claim against news website Independent Journal Review (IJR) after IJR used his photograph of musician Ted Nugent in an online article. IJR sought summary judgment, arguing that its use of the photo constituted fair use under the Copyright Act and alternatively arguing that Philpot's copyright registration was invalid. Philpot also sought summary judgment, contending that his registration was valid and that IJR's use was not fair use. The district court granted summary judgment to IJR on fair use grounds and denied Philpot's motion.On appeal, the United States Court of Appeals for the Fourth Circuit reversed and remanded the decision. The court held that IJR's use of the photograph did not constitute fair use because it was non-transformative and commercial, and it adversely affected the potential market for the photograph. It also found that Philpot's copyright registration was valid because the photograph was not published before Philpot registered it as an unpublished work. The court concluded that IJR was not entitled to summary judgment on its fair use defense and that Philpot was entitled to summary judgment on the validity of the copyright registration. View "Philpot v. Independent Journal Review" on Justia Law

A jury convicted Defendant of one count of acting as an unregistered agent of a foreign government and one count of criminal conspiracy. The district court granted a judgment of acquittal as to both charges and conditionally granted a new trial in the event the judgment of acquittal was reversed on appeal. On appeal, in Rafiekian I, the Fourth Circuit reversed the judgments of acquittal, vacated and remanded the court’s new-trial order, and noted that the district court “may have additional justifications for its decision” that it failed to explain. On remand, ordered a new trial. The government appealed.   The Fourth Circuit affirmed. The court explained that because the government’s case relied on the jury’s drawing inferences of guilt, the district court had no choice but to examine those inferences in considering the new trial motion. Barring the district court from granting a new trial based solely on disagreement with the jury’s inferences of guilt would place this class of cases beyond the reach of the new-trial standard. The government is entitled to rely on circumstantial evidence, but it is not entitled to special deference when it does so.   In this case, because the district court determined that a new trial was warranted based on the weight of the evidence, the court’s role is only to ask whether the court abused its discretion in doing so. Exercising “great deference” to the district court’s “discretionary assessments of the balance of the evidence,” the court held that it did not. View "US v. Bijan Rafiekian" on Justia Law

Appellants are a Swiss consortium, Interprofession du Gruyère (“IDG”), and a French consortium, Syndicat Interprofessionel du Gruyère (“SIG”) (together, “the Consortiums”), who believe that gruyere should only be used to label cheese that is produced in the Gruyère region of Switzerland and France. Seeking to enforce this limitation in the United States, the Consortiums filed an application with the United States Patent and Trademark Office (“USPTO”) to register the word “GRUYERE” as a certification mark. Appellees, the U.S. Dairy Export Council, Atalanta Corporation, and Intercibus, Inc. (together, “the Opposers”), opposed this certification mark because they believe the term is generic and, therefore, ineligible for such protection. The USPTO’s Trademark Trial and Appeal Board (“TTAB”) agreed with the Opposers and held that “GRUYERE” could not be registered as a certification mark because it is generic. The Consortiums filed a complaint challenging the TTAB’s decision in the United States district court. The district court granted summary judgment for the Opposers on the same grounds as articulated in the TTAB’s decision.   The Fourth Circuit affirmed and concluded that that the term “GRUYERE” is generic as a matter of law. The court explained that the Consortiums have not brought evidence bearing on whether, at an earlier point in history, the term “GRUYERE” was in common use in the United States. But even assuming that was the case, this argument still fails. In sum, the Consortiums cannot overcome what the record makes clear: cheese consumers in the United States understand “GRUYERE” to refer to a type of cheese, which renders the term generic. View "Interprofession du Gruyere v. U.S. Dairy Export Council" on Justia Law