Dmarcian, Inc. v. DMARC Advisor BV

District Court, W.D. North Carolina·Decided June 9, 2022·No. 1:21-cv-00067·Unknown

Opinion

IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF NORTH CAROLINA ASHEVILLE DIVISION CIVIL CASE NO. 1:21-cv-00067-MR

DMARCIAN, INC., ) ) Plaintiff, ) ) vs. ) MEMORANDUM OF ) DECISION AND ORDER DMARCIAN EUROPE BV, ) ) Defendant. ) ________________________________ )

THIS MATTER is before the Court on the Plaintiff’s Motion for Attorneys’ Fees and Costs [Doc. 88]. I. BACKGROUND The Plaintiff dmarcian, Inc. (“the Plaintiff” or “dInc”) initiated this action for copyright and trademark infringement and related state claims against the Defendant dmarcian Europe BV (“the Defendant” or “dBV”) on March 12, 2021. [Doc. 1]. On March 25, 2021, the Plaintiff filed a motion for a temporary restraining order and preliminary injunction, seeking to enjoin the Defendant from (1) making, using, distributing, and/or selling dmarcian software code/derivative works; (2) directly or indirectly using the Plaintiff’s trademarks or any other similar mark, word, or name likely to cause confusion, mistake, or deceive; (3) infringing the Plaintiff’s registered copyright; (4) misrepresenting its present affiliation with the Plaintiff; and (5) interfering with customer relationships, contacting, posting false notice to,

and misrepresenting falsely to customers that the Plaintiff had caused a breach of customer data. [Doc. 6 at 1-2]. On March 31, 2021, the Court denied the Plaintiff’s request for a temporary restraining order and held the

motion for preliminary injunction in abeyance pending further presentation of evidence and briefing by the parties. [Doc. 12]. Shortly before the preliminary injunction hearing was to be held, the Defendant filed a motion to dismiss for lack of personal jurisdiction and forum

non conveniens. [Doc. 22]. The Court heard the Defendant’s motion along with the Plaintiff’s preliminary injunction motion at a hearing on April 23, 2021.

The Court issued an Order granting a preliminary injunction and denying the Defendant’s motion to dismiss on May 26, 2021 (“the Preliminary Injunction Order”). [Doc. 39]. As is relevant here, paragraphs (4), (5), (6), and (7) of the Preliminary Injunction Order enjoined the Defendant, its

officers, agents, servants, employees, attorneys, affiliates, and those persons in active concert or participation with it from: (4) using the Plaintiff’s trademark in any manner unless such use is accompanied by a statement which reads: “This trademark is the trademark of dmarcian, Inc. This website is produced and generated and posted by dmarcian 2 Europe BV, which is a different entity from dmarcian, Inc. This trademark is being used at this location without the permission of dmarcian, Inc. and only pursuant to the terms of a court order allowing its temporary use during litigation between dmarcian, Inc. and dmarcian Europe BV.” That statement must be at least the size of the trademark itself, as presented, or 12-point type when displayed on a 24” computer screen, whichever is larger. Such statement must appear immediately adjacent to the location where the trademark appears, and must be shown at each location where the trademark appears, whether that be on the Defendant’s website, in printed material, an electronic display, or otherwise;

(5) displaying any website with the “dmarcian” name unless that website includes a statement that “The dmarcian software was originally developed by dmarcian, Inc. This is not the website of dmarcian, Inc. The website of dmarcian, Inc. can be found at https://dmarcian.com.” That statement must be displayed as a banner at the top of each page of the website on which the dmarcian name appears and must be of a size that is at least 12-point type when displayed on a 24” computer screen, and the reference to the website of the Plaintiff must be a link to that website;

(6) redirecting, encouraging, or allowing any customer to change its service provider or payment recipient from dmarcian, Inc. to dmarcian Europe, BV; or

(7) making any public statement about dmarcian, Inc. except as expressly allowed or directed herein.

[Doc. 39 at 75-77]. On June 22, 2021, the Plaintiff filed a Motion for Order to Show Cause, arguing that the Defendant was violating the Preliminary Injunction Order in four primary respects. [Doc. 43]. First, the Plaintiff argued that the 3 Defendant was “violating Paragraph (4) of the Order by failing to either post the required disclaimers or cease the use of all dmarcian domain names to

redirect all global customers and potential customers to Defendant’s newly established website, dmarcadvisors.com.” [Id. at 2]. Second, the Plaintiff argued that the Defendant was violating Paragraphs (4) and (5) of the Order

by failing to post court-required disclaimers on its websites where the use of the dmarcian name or dmarcian mark appeared. [Id.]. Third, the Plaintiff argued that the Defendant was violating Paragraph (4) of the Order by failing to post the required disclaimers where the dmarcian name and/or mark were

used on its non-website publications, as well as in signature blocks in emails. [Id. at 2-3]. Finally, the Plaintiff claimed that the Defendant was violating Paragraphs (4), (6), and (7) of the Order by soliciting customers to move to

dBV’s platform and away from dmarcian’s platform by stating that dmarcian’s platform was “unsafe” and using the Plaintiff’s trademarks in that communication without the required disclaimers. [Id. at 3]. On June 28, 2021, the Defendant appealed the Preliminary Injunction

Order to the Court of Appeals for the Fourth Circuit. [Doc. 52]. That appeal remains pending. The Court held a show cause hearing on July 28, 2021. Following that

hearing, on August 5, 2021, the Defendant voluntarily shut down the 4 “dmarcian” domains and stopped redirecting traffic to its dmarcadvisor.com websites. [Doc. 78: Groeneweg Decl. at ¶ 5].

On August 11, 2021, the Court entered an Order (“the Contempt Order”) holding the Defendant in civil contempt. [Doc. 80]. Specifically, the Court found that the Defendant had used the Plaintiff’s trademark, in violation

of paragraph (4), by “redirecting website traffic for various ‘dmarcian’ domain names to the Defendant’s website without posting the relevant disclaimers that are required by the Preliminary Injunction.” [Id. at 14, 21-22]. The Court rejected the other grounds asserted by the Plaintiff, finding that the Plaintiff

had not shown by clear and convincing evidence that the Defendant had violated the Preliminary Injunction in the other ways alleged. [Id. at 22-23, 23-24].

As a sanction for the Defendant’s contempt, the Court ordered the Defendant to pay $5,000.00 per day for each day, starting from May 29, 2021, that the Defendant continued to operate any of the websites featuring “dmarcian” domain names following the entry of the Preliminary Injunction

Order. [Id. at 24-25]. While acknowledging that the Defendant had already provided some evidence of its voluntary attempts to purge its contempt, the Court gave the parties fourteen days to provide any further evidence of the

Defendant’s compliance or non-compliance with the Preliminary Injunction. 5 [Id. at 25]. The Court further ordered the Defendant to pay the Plaintiff its reasonable attorneys’ fees and costs in litigating the contempt matter and

directed Plaintiff to file a brief detailing its reasonable costs, fees, and expenses incurred in this action. [Id. at 27]. On August 25, 2021, the Defendant filed the Sixth Declaration of

Martijn Groeneweg, addressing the Defendant’s efforts at compliance with the Preliminary Injunction Order. [Doc. 84]. After receiving an extension of time to do so, the Plaintiff filed the present motion, seeking an award of fees and expenses, as well as a calculation of the total amount of sanctions owed

under the Contempt Order. [Doc. 88].

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