What happened
The Fourth Circuit kept in place a preliminary injunction against Dutch software company DMARC Advisor BV in Dmarcian Inc.'s cross-border intellectual property suit, holding that the Supreme Court's Abitron decision did not bar U.S. law from reaching conduct aimed at American customers.
In a published opinion by Judge J. Harvie Wilkinson III, joined by Judge James A. Wynn Jr. and Senior Judge Barbara Milano Keenan, the panel affirmed the second amended preliminary injunction and dismissed the rest of DMARC Advisor's appeal. The court said Abitron changed the inquiry from domestic effects to domestic conduct, but that the shift did not change the result in this case: "the bottom line remains the same under Abitron’s conduct-focused test."
Dmarcian, a North Carolina company, accused DMARC Advisor of stealing its brand name, software code and customers after a business relationship broke down. The Fourth Circuit had previously upheld an injunction under then-governing precedent focused on domestic effects, but the district court later modified the injunction after Abitron and after Dmarcian's copyright claim was dismissed.
The Fourth Circuit said the record showed more than a foreign website that could be viewed in the United States. The panel pointed to allegations that DMARC Advisor used Dmarcian's mark as a domain name on a website described as virtually identical to Dmarcian's, offered essentially the same services, included a button for customers in the Americas, sent messages to U.S. customers and persuaded at least one U.S. company, Clarizen, to switch providers.
That mattered because Abitron requires domestic infringing use in commerce for the Lanham Act provisions at issue, the panel said. A passive foreign website accessible in the United States might not be enough, the court cautioned, but marketing, advertising or sales directed to U.S. recipients can support domestic application of the trademark statute.
The panel declined to review at this stage DMARC Advisor's challenges to a correction order tied to Dutch proceedings and a $400,000 civil contempt order, saying it lacked interlocutory jurisdiction over those issues. The court emphasized that leaving those orders in place for now was not an endorsement and said the foreign-court directive and contempt issues could be weighed after final judgment.
The Fourth Circuit also denied DMARC Advisor's request to reassign the case to a different district judge, saying reassignment is an unusual remedy and that the district court had taken a conscientious approach to a complex case. With the injunction affirmed, the panel denied a stay pending appeal and lifted the administrative stay of trial, clearing the parties to return to the merits in North Carolina federal court.