Dmarcian, Inc. v. DMARC Advisor BV

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. ) O R D E R
)
DMARCIAN EUROPE BV, )
)
Defendant. )
___________________________ )
THIS MATTER is before the Court on the Defendant’s Response [Doc.
61] to the Court’s Show Cause Order [Doc. 54] as to why the Defendant
should not be held in contempt for violations of the Court’s Preliminary
Injunction [Doc. 39]. The Court conducted a hearing on July 28, 2021, on
the return of the Court’s Show Cause Order.
I. PROCEDURAL BACKGROUND
On May 26, 2021, the Court entered an Order imposing a Preliminary
Injunction against the Defendant. [Doc. 39]. The Preliminary Injunction
enjoined the Defendant, its officers, agents, servants, employees, attorneys,
affiliates, and those persons in active concert or participation with it from:
(1) providing services to any customers located
outside of Europe, Africa, or Russia, except for the
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six customers detailed in the Defendant’s Brief on
Proposed Voluntary Commitments [Doc. 32 at 4 n.3];
(2) providing access to any of its websites to IP
addresses from countries outside of Europe, Africa,
or Russia. The Defendant shall inform website
visitors from outside of those areas that it does not
create new accounts in that region and shall direct
those customers to contact dmarcian, Inc. for
services through the Plaintiff’s website
https://dmarcian.com;
(3) making changes to the copyrighted software
except as specifically and expressly allowed or
directed by this Order;
(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 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,
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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.
[Doc. 43]. The Plaintiff argues that the Defendant is violating the Preliminary
Injunction by continuing to use the Plaintiff’s trademark without the obligatory
disclaimers, continuing to display the “dmarcian” name without the obligatory
disclaimers, soliciting customers to change service providers from the
Plaintiff to the Defendant, and making public statements about the Plaintiff.
[Id. at 1-2]. The Plaintiff seeks sanctions, including reasonable attorney’s
fees. [Id. at 3].
On June 28, 2021, the Court entered the present Show Cause Order,
directing the Defendant to show cause why the Court should not impose
sanctions for failure to comply with the Preliminary Injunction. [Doc. 54]. On
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July 6, 2021, the Defendant filed its response to the Court’s Order to Show
Cause. [Doc. 61]. On July 13, 2021, the Plaintiff replied. [Doc. 66].
Accompanying their filings the parties have presented extensive written
testimony and documentary evidence showing the manner in which the
Defendant has acted in response to the Preliminary Injunction. The Court
conducted a hearing on July 28, 2021, on the return of the Court’s Show
Cause Order and thereby provided an opportunity for the Defendant to show
why it should not be held in civil contempt.
II. STANDARD OF REVIEW
District courts have “inherent power to enforce compliance with their
lawful orders through civil contempt.” Sullivan v. United States, 384 U.S.
364, 370 (1966). “That power includes the ability to award damages and
attorney's fees to an aggrieved party.” Rainbow Sch., Inc. v. Rainbow Early
Educ. Holding LLC, 887 F.3d 610, 617 (4th Cir. 2018) (citing Hutto v. Finney,
437 U.S. 678, 691 (1978)). To establish civil contempt, there must be clear
and convincing evidence of four elements:
(1) the existence of a valid decree of which the
alleged contemnor had actual or constructive
knowledge; (2) that the decree was in the movant's
“favor”; (3) that the alleged contemnor by its conduct
violated the terms of the decree, and had knowledge
(at least constructive knowledge) of such violations;
and (4) that the movant suffered harm as a result.
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United States v. Ali, 874 F.3d 825, 831 (4th Cir. 2017).
III. FACTUAL BACKGROUND
Upon consideration of the evidence presented by the parties, the Court
finds the following facts to be established by clear and convincing evidence:
A. Defendant’s Refusal to Give Injunction to the Dutch Court
1. On January 29, 2021, the Defendant commenced an action against the
Plaintiff in a Dutch court. [Doc. 26-1 at ¶ 39].
2. On February 1, 2021, the Dutch court entered an injunction against the
Plaintiff without the Plaintiff having filed an appearance. [Id.].
3. On March 12, 2021, the Plaintiff commenced the present action in this
Court. [Doc. 1].
4. On March 25, 2021, the Plaintiff filed a motion for a temporary
restraining order and preliminary injunctive relief. [Doc. 6].
5. On March 30, 2021, the Defendant filed a memorandum in opposition
to the Plaintiff’s motion for injunctive relief, arguing in part that an
injunction by this Court preventing the Defendant from servicing
customers in Europe, Russia, and Africa would “contradict a Dutch
court’s recent judgment that Plaintiff and its founder must “grant
dmarcian Europe access to the (computer) systems necessary to
service its customers,” [Doc. 11 at 1], and that the Plaintiff was “wrong
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to ask [this] Court to interfere with [the Dutch] proceedings and decide
whether . . . dmarcian Europe can continue to operate its business in”
Europe, Russia, and Africa [Id. at 2].
6. On March 31, 2021, this Court denied the Plaintiff’s motion for a
temporary restraining order and held the motion for preliminary
injunction in abeyance pending further presentation of evidence and
briefing by the parties. A hearing on the motion for preliminary
injunction was scheduled for April 23, 2021. [Doc. 12].
7. On April 6, 2021, the Plaintiff moved to set aside the injunction entered
by the Dutch court. [Doc. 26-1 at ¶ 41].
8. On April 19, 2021, the Defendant filed a Motion to Dismiss in this Court
for lack of personal jurisdiction and forum non conveniens. [Doc. 22].
9. At the April 23, 2021 hearing, the Defendant reiterated its argument
that the Plaintiff’s requested injunctive relief was essentially a request
for this Court “to second-guess proceedings that are going forward in
the Dutch courts under Dutch law.” [Doc. 34 at 190]. The Defendant
further argued that “we're potentially going to end up in a situation
where the Dutch court is ordering this plaintiff to do one thing, the U.S.
court is ordering the defendant to do something that, you know, is going
to be like two trains running together.” [Id. at 191].
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10. Both parties were given the opportunity to submit proposals as to how
the Court could order the preservation of the status quo without greatly
impacting the business of either party.
11. On May 10, 2021, the Dutch court held a hearing on the Plaintiff’s
attempt to set aside the injunction. [Doc. 57-1 at ¶ 4].
12. The Dutch court advised the parties to expect a written decision on
May 31, 2021. [Id. at ¶ 5].
13. Under Dutch law, a “judge shall not take note of submissions after the
court determined the decision date without consent of the other
party[,]” which means that “the case is closed after the hearing and due
process prevents unilateral submissions to the court after that date.”
[Id. at ¶ 5].
14. On May 26, 2021, this Court entered its Preliminary Injunction in this
case, finding personal jurisdiction over the Defendant and enjoining the
Defendant from performing certain specified actions. The Preliminary
Injunction took into account the filings of the parties regarding
proposed ways of preserving the status quo. This Court also
undertook to narrowly tailor the Preliminary Injunction to respect the
actions and jurisdiction of the Dutch court. [Doc. 39]. In that Order,
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the Court also denied the Defendant’s Motion to Dismiss on the
grounds of personal jurisdiction and forum non conveniens. [Id.].
15. On May 27, 2021, the Plaintiff posted the bond to activate the
Preliminary Injunction.
16. On May 28, 2021, the Plaintiff asked the Defendant to provide its
consent to the submission of the Preliminary Injunction to the Dutch
court. [Doc. 57-1 at ¶ 6].
17. The Defendant refused to consent to provide the Preliminary Injunction
to the Dutch court, with the Defendant’s Dutch counsel explaining to
the Plaintiff’s Dutch counsel that the refusal to provide the Preliminary
Injunction to the Dutch court was “in accordance with client’s
instruction.” [Doc. 47-1 at 2].
18. Because the Defendant withheld the Preliminary Injunction from the
Dutch court, the Dutch court issued a ruling on May 31, 2021 without
knowledge of what had occurred between these parties in this action,
particularly that this Court had denied the Defendant’s Motion to
Dismiss and had entered a Preliminary Injunction pertaining to the
Defendant’s actions. [Doc. 57-1 at ¶ 6].
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B. Defendant’s Continued Use of the Plaintiff’s Trademark
19. The Court’s Preliminary Injunction found that the Plaintiff owned a valid
trademark for the word “dmarcian” and that the Plaintiff had
demonstrated a likelihood of confusion stemming from the Defendant’s
use of that trademark. [Doc. 39 at 50].
20. The Preliminary Injunction explained that customers were being
confused by the overlapping services of the Plaintiff and the Defendant
and that “[s]uch confusion is unsurprising given that the Defendant is
using the Plaintiff’s mark as its domain name[,]” among other actions.
[Id. at 51 (citing Doc. 19 at ¶ 138; Doc. 8-1; Doc. 8-2; Doc. 8-3; Doc. 8-
4; Doc. 8-6; Doc. 8-7)].
21. The Preliminary Injunction prohibited the Defendant from “using the
Plaintiff’s [“dmarcian”] trademark in any manner unless such use is
accompanied” by a disclaimer regarding the ownership of the
trademark. [Doc. 39 at 76].
22. Despite the Preliminary Injunction, the Defendant continued to redirect
traffic to its website from domain names featuring the Plaintiff’s
“dmarcian” trademark, including dmarcian.eu, dmarcian.nl,
dmarcian.co.uk, dmarcian.be, dmarcian.es, dmarcian.fr, dmarcian.at,
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dmarcian.frl, dmarcian.io, dmarcian.jp, and dmarcian.hk. [Doc. 46 at
2-4].
23. The Defendant did not post the required disclaimer on any of its
websites that received internet traffic from those domain names. In
fact, the Defendant undertook no action whatsoever to attempt to
comply with this Court’s Preliminary Injunction as it pertains to the use
of the domain names that contain the Plaintiff’s trademark.
24. The Plaintiff sent the Defendant multiple letters complaining about the
continued use of the “dmarcian” domain names to redirect visitors to
the Defendant’s websites without the display of the required
disclaimers. [Doc. 48-1 at 1; Doc. 48-2 at 1; Doc. 48-4 at 2].
25. Despite the Plaintiff’s objections, the Defendant refused to stop using
the “dmarcian” domain names to redirect visitors to its website or post
the disclaimers. [Doc. 48-3 at 1; Doc. 48-5 at 2].
26. After the Court held a hearing on the Show Cause Order on July 28,
2021, the Defendant filed a declaration stating that on August 5, 2021
it voluntarily discontinued redirecting internet traffic to its website from
the “dmarcian” domain names, including: “dmarcian.co.uk,
dmarcian.nl, dmarcian.fr, dmarcian.es, dmarcian.eu and dmarcian-
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europe.com . . . and all other domain names under its control that use
the word “dmarcian.” [Doc. 78 at ¶ 5].
IV. DISCUSSION
A. Defendant’s Refusal to Give Injunction to the Dutch Court
The Show Cause Order directed the Defendant to explain its decision
to withhold the Preliminary Injunction from the Dutch court. [Doc. 54].
The Defendant provides several explanations for the refusal to provide
the Preliminary Injunction to the Dutch court. First, the Defendant argues
that “under Dutch procedural law the adversarial part of the proceedings had
already been closed for 3 weeks[.]” [Doc. 57-1 at ¶ 6]. While that is an
undisputed statement of fact and law, it does not explain why the Defendant
withheld the Preliminary Injunction from the Dutch court.
Second, the Defendant states that it refused to provide the Preliminary
Injunction to the Dutch court because the Defendant did not believe that the
Preliminary Injunction would have changed the Dutch court’s findings,
altered the Dutch court’s determination that it had jurisdiction, or persuade
the Dutch court to reopen the case and schedule a new hearing. [Id.]. The
Defendant’s unilateral determination that the Preliminary Injunction would
not alter the Dutch court’s analysis bears little weight. At the very least, the
Defendant’s refusal to provide the Preliminary Injunction to the Dutch court
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increased the possibility that this Court and the Dutch court would issue
inconsistent or conflicting judgments. Hypocritically, the Defendant has
repeatedly raised concerns about the possibility of conflicting judgments in
this Court in its briefs on the Plaintiff’s motions for injunctive relief, its own
motion to dismiss, and its own motion to stay the injunction pending appeal.
[Doc. 11 at 12; Doc. 32 at 1; Doc. 60 at 14].
Third, the Defendant states that it considered the provision of the
Preliminary Injunction to be “undesirable, potentially inequitable and contrary
to due process in view of the fact that the U.S. Order exists of 78 pages with
considerations and findings that require further consultation of the parties to
secure due process[.]” [Doc. 57-1 at ¶ 6]. The Defendant does not explain
why the length of a judicial order makes its provision to the Dutch court
“inequitable” or “contrary to due process.” To the contrary, by withholding a
relevant judicial order from the Dutch court, the Defendant thwarted due
process, undermined cooperation between the two courts, and generally
acted in an inequitable manner.
Fourth, the Defendant states that it withheld the Preliminary Injunction
from the Dutch court because the Plaintiff “waited until Friday May 28, 2021
with its request for consent, knowing that the decision from the Court of
Rotterdam would be delivered the next working day and was probably
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already drafted[.]” [Id.]. This argument is meritless. The Court entered its
injunction on May 26 at 3:59 p.m. [Doc. 39]. The Plaintiff posted the bond
activating the injunction at 4:24 p.m. the next day (9:24 p.m. in the
Netherlands). [Doc. 66 at 15]. The Plaintiff acted reasonably by asking the
Defendant for consent to submit the Preliminary Injunction to the Dutch court
the next day.
Finally, the Defendant states that if “the Rotterdam Court would have
reopened the case and scheduled a new hearing upon submission of the
U.S. Order, this would have resulted in a further substantial delay which [the
Defendant would have] found unacceptable” because the Plaintiff had
previously refused to comply with the Dutch court’s order, was attempting to
put the Defendant out of business, and had ignored the Defendant’s previous
requests to communicate about problems between the parties. [Id.]. By
acknowledging the possibility that the Dutch court may have reopened the
case and scheduled a new hearing upon learning of the Preliminary
Injunction, the Defendant undercuts its other explanations for refusing to
provide the Preliminary Injunction to the Dutch court. Moreover, the
Plaintiff’s actions, wrongful or not, are not a basis for withholding a clearly
relevant order from the Dutch court. Most importantly, the Defendant
manifests its contempt for this Court and for its order by unilaterally choosing
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not to abide by it because the Defendant found such compliance to be
“unacceptable” to it. How or why the Defendant or its counsel believed that
compliance with this Court’s injunction was purely in its own discretion is not
explained.
In sum, the Defendant was aware that the Preliminary Injunction was
designed to preserve the status quo by placing very limited and reasonable
restrictions on the Defendant while the Dutch court conducted its
investigation. The Defendant’s decision to withhold the Preliminary
Injunction from the Dutch court violated a significant purpose of that order
and directly contradicted the Defendant’s prior positions in this Court by
creating a risk of conflicting judgments between this Court and the Dutch
court. The Defendant’s disingenuous conduct reflects poorly on its
credibility, which is relevant as to whether the Defendant attempted to
comply with the Preliminary Injunction in good faith.
B. Defendant’s Continued Use of the Plaintiff’s Trademark
The Plaintiff argues that the Defendant has continued infringing on its
trademark 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. [Doc. 49 at 6-9].
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Although the Defendant admits that it was continuing to redirect traffic
to its website from a variety of “dmarcian” domain names, the Defendant
argues that employing the Plaintiff’s trademark to redirect visitors to its
websites did not violate the Preliminary Injunction and cannot support a
contempt finding because “there is no specific command about domain
names in the Preliminary Injunction.” [Doc. 61 at 16]. This argument is
meritless. The Preliminary Injunction specifically forbade the Defendant from
“using the Plaintiff’s trademark in any manner” unless accompanied by the
relevant disclaimer. [Doc. 39 at 76 (emphasis added)]. As such, the
Preliminary Injunction made clear that the Defendant could not use the
Plaintiff’s trademark without the relevant disclaimers (whether in a domain
name or otherwise).1 At a minimum, the Defendant had constructive
knowledge that continuing to use the “dmarcian” domain names would
violate the Preliminary Injunction, as directing internet traffic to the
Defendant’s business by using domain names consisting of the Plaintiff’s
1 The Court offered both parties the opportunity to submit proposed restraints that would
preserve the status quo and protect the parties’ business interests during the proceedings
in this Court and the Dutch courts. [Doc. 34 at 203-205]. While the Defendant submitted
proposed restraints, [Doc. 32], it did not propose a rebranding such as what it has
undertaken. After the Court entered its Preliminary Injunction, however, the Defendant
opted to rebrand rather than comply with the scheme contemplated in the parties’ filings
and the Preliminary Injunction. If there was any confusion associated with the mandate
in the Preliminary Injunction, it resulted from the Defendant’s choice to follow a course of
action that was not contemplated by its proposed restraints or the Preliminary Injunction.
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trademark is among the purest modern forms of trading on the Plaintiff’s
name.
The Defendant further argues that its use of the domain names did not
create a likelihood of confusion because the domain names merely
redirected visitors to the Defendant’s rebranded websites, which “feature the
DMARC Advisor name and logo” and “do not mention” the Plaintiff or
“dmarcian.” [Doc. 61 at 14-15]. However, the Plaintiff has demonstrated that
consumers are actually being confused by the overlapping services being
offered by the Plaintiff and the Defendant. As the Preliminary Injunction
explained, “[s]uch confusion is unsurprising given that the Defendant is using
the Plaintiff’s mark as its domain name[.].” [Doc. 39 at 51 (emphasis added)
(citing Doc. 19 at ¶ 138; Doc. 8-1; Doc. 8-2; Doc. 8-3; Doc. 8-4; Doc. 8-6;
Doc. 8-7)]. It is unclear why the Defendant now argues that “there is no
likelihood of confusion” stemming from its continued use of the domain
names when the Preliminary Injunction explicitly stated that the use of the
domain names was causing consumer confusion. [Doc. 61 at 14]. This
argument is meritless.
The Defendant further argues that the use of a domain name cannot
constitute trademark infringement under the Fourth Circuit’s decision in
Lamparello v. Falwell, 420 F.3d 309 (4th Cir. 2005). [Doc. 61 at 14]. In
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Lamparello, Jerry Falwell’s claimed that his “Falwell” trademarks were being
infringed by a parody website located at www.Fallwell.com. 420 F.3d 309,
310 (4th Cir. 2005). Falwell argued that the mere similarity between the two
domain names was sufficient to establish trademark infringement under the
“initial interest confusion theory,” which bars “a competitor from luring
potential customers away from a producer by initially passing off its goods
as those of the producer's, even if confusion as to the source of the goods is
dispelled by the time any sales are consummated.” Id. at 316. The Fourth
Circuit rejected that argument, explaining that the relevant inquiry was
“whether the use in its entirety creates a likelihood of confusion” when viewed
“in the context in which it is seen by the ordinary consumer.” Id.2 The Fourth
Circuit explained that the similarities between the domain names did not
establish a likelihood of confusion because the parody site did not offer
similar goods or services as Falwell’s website; the parody site featured a
prominent disclaimer explaining that it was not affiliated with Jerry Falwell
and provided a hyperlink to Falwell's website; the parody site looked different
from Falwell’s website; visitors to the parody website “quickly realized that
Reverend Falwell was not the source of the content therein[;]” and the parody
2 The Defendant’s discussion of the “initial interest confusion theory” is inapposite. The
preliminary injunction did not rely on the “initial interest confusion theory” as a basis for
finding a likelihood of success on the Plaintiff’s trademark infringement claim.
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website was not attempting to profit from the business interests that were
protected by the trademarks. Id. at 315-17. Accordingly, the Fourth Circuit
concluded that the parody site did not infringe on Falwell’s trademarks
because there was no likelihood of consumer confusion. Id.
Unlike Lamparello, there was a serious risk of consumer confusion
stemming from the Defendant’s continued use of the “dmarcian” domain
names because the Plaintiff and the Defendant offer essentially identical
services; the Defendant has refused to post a disclaimer on its websites;
visitors have been confused about the similarities between the Plaintiff and
the Defendant’s branding; and the Defendant’s site attempts to profit from
the business interests that are protected by the Plaintiff’s trademarks. While
the Defendant argues that this case is like Lamparello because the parties’
websites look different after the Defendant rebranded and changed the logo
and color scheme of its websites, the parties’ websites still look substantially
similar and have the same layout, the same features in the same places, the
same functionality, and virtually identical text. Under such circumstances,
the unauthorized use of a company’s trademark to redirect visitors to a
different website constitutes trademark infringement. See People for Ethical
Treatment of Animals v. Doughney, 263 F.3d 359, 365 (4th Cir. 2001);
Herrmann Int'l, Inc. v. Herrmann Int'l Eur., No. 1:17-CV-00073-MR, 2021 WL
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861712, at *10 (W.D.N.C. Mar. 8, 2021) (Reidinger, C.J.); Buzz Off Insect
Shield, LLC v. S.C. Johnson & Son, Inc., No. 1:05-CV-363, 2009 WL
10712996, at *2 (M.D.N.C. July 30, 2009).3 After all, any consumer who
seeks the Plaintiff’s services by accessing a domain name with the Plaintiff’s
trademarked name in it, and there finds a business providing that precise
service, the different name displayed by the Defendant would most likely lead
the consumer to conclude that the Plaintiff has rebranded.
The Defendant further argues its continued use of the “dmarcian”
domain names did not violate the Preliminary Injunction because it would
have been impossible to place the disclaimer adjacent to a domain name, as
required by the injunction. [Doc. 61 at 16]. The Defendant also argues that
the disclaimer’s reference to “this trademark” no longer made sense after the
Defendant rebranded to DMARC Advisor and started displaying its DMARC
Advisor trademark on its website. [Doc. 61 at 16]. The Defendant’s
argument that it cannot place a disclaimer immediately adjacent to a domain
name is disingenuously technical. Even though the Defendant could not
place the disclaimer in the address bar of an internet browser, the Defendant
3 Even if the parties’ websites had appeared materially different following the rebrand, the
touchstone for the likelihood of confusion inquiry is the “content of the website” rather
than its appearance. Lamparello, 420 F.3d at 315-17. Because the parties’ websites
offer essentially the same content, the Defendant’s use of the Plaintiff’s trademark is likely
to cause consumer confusion, particularly because the Defendant and the Plaintiff are
competitors who offer identical services.
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made no good faith attempt to comply with the Preliminary Injunction, for
instance by posting a slightly modified version of the required disclaimer as
the landing page of its websites that received traffic from the “dmarcian”
domain names. The consumer could then choose to search out the Plaintiff’s
site or proceed to the Defendant’s. The Defendant also could have made a
good faith attempt to comply with the Preliminary Injunction by moving the
Court to clarify or amend the disclaimer language after it rebranded. Notably,
the Defendant filed a motion to amend or clarify the Preliminary Injunction
but made no argument asserting any confusion or issues with the disclaimer
language. Instead, the Defendant unilaterally chose to ignore the disclaimer
requirement. That falls far short of making a good faith attempt to comply
with the Preliminary Injunction. It was, in fact, no attempted compliance at
all.
In sum, the Preliminary Injunction gave the Defendant actual and
constructive knowledge that using the Plaintiff’s trademark as a domain
name to redirect visitors to its website constituted trademark infringement.
The Defendant received multiple notices of those violations and therefore
had constructive knowledge that its continued use of the Plaintiff’s trademark
in domain names violated the Preliminary Injunction. Rainbow Sch., Inc. v.
Rainbow Early Educ. Holding LLC, 887 F.3d 610, 618-19 (4th Cir. 2018).
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Even though the nature of the infringement makes it difficult to ascertain the
exact harm to the Plaintiff because it is impossible to know how many
potential customers were redirected to the Defendant’s website after
entering the Plaintiff’s trademark into a search engine or an address bar, the
Defendant’s continued use of the Plaintiff’s trademark presumptively causes
harm. Rainbow Sch., Inc. v. Rainbow Early Educ. Holding LLC, No. 5:14-
CV-482-BO, 2016 WL 7243538, at *3 (E.D.N.C. Dec. 14, 2016), aff'd, 887
F.3d 610 (4th Cir. 2018) (citing Rebel Debutante LLC v. Forsythe Cosmetic
Grp., Ltd., 799 F. Supp. 2d 558, 580 (M.D.N.C. 2011)). Moreover, the
Defendant’s continued use of the Plaintiff’s trademark enabled the
Defendant to collect consumer information and customer relationships that
may otherwise have been obtained by the Plaintiff from users seeking its
services by visiting websites under its trademark. [Doc. 45-2]. Further, as
demonstrated by the exhibits submitted throughout this matter, the
Defendant’s continued use of the Plaintiff’s trademark has caused consumer
confusion. [Doc. 19 at ¶ 138; Doc. 8-1; Doc. 8-2; Doc. 8-3; Doc. 8-4; Doc. 8-
6; Doc. 8-7); see also Doc. 44 at ¶¶ 1-13; Doc. 64 at ¶¶ 2, 6-9]. That is
sufficient to establish harm to the Plaintiff.
For these reasons, the Court concludes that there is clear and
convincing evidence that the Preliminary Injunction was a valid decree of
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which the Defendant had actual knowledge; that the Preliminary Injunction
was in the Plaintiff’s favor; that the Defendant had at least constructive
knowledge that its continued use of the “dmarcian” domain names violated
the Preliminary Injunction; and that the Plaintiff suffered harm as a result.
Accordingly, the Court concludes that the elements of civil contempt are
established here. United States v. Ali, 874 F.3d 825, 831 (4th Cir. 2017).4
C. Defendant’s Continued Display of the Plaintiff’s Trademark
The Plaintiff also moves for civil contempt on the grounds that the
Defendant violated the Preliminary Injunction by continuing to display the
Plaintiff’s trademark in various places. [Doc. 49 at 9-10]. The Defendant
states that it has removed every reference that has been located. [Doc. 57-
18 at ¶ 51]. The documentary evidence presented to the Court shows that
the Defendant had made significant effort to remove the Plaintiff’s “dmarcian”
name from its internet presence. Even though the Defendant may not have
been successful in removing every single reference to the Plaintiff’s
4 Because the Plaintiff sought civil contempt against the Defendant, rather than its agents,
the Court does not address the actions of Alfred Meijboom or Hubert J. Harmeling, who
appear to be responsible for the Defendant’s violation of the Preliminary Injunction.
Wilson v. United States, 221 U.S. 361, 376 (1911) (explaining that “[a] command to the
corporation is in effect a command to those who are officially responsible for the conduct
of its affairs[,]” and that “[i]f they, apprised of the writ directed to the corporation, prevent
compliance or fail to take appropriate action within their power for the performance of the
corporate duty, they, no less than the corporation itself, are guilty of disobedience, and
may be punished for contempt.”).
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trademark, the Plaintiff has not shown by clear and convincing evidence what
amounts to a purposeful or contemptuous violation of the Preliminary
Injunction in this regard.
D. Defendant’s Continued Solicitation of Customers
The Plaintiff also moves for civil contempt on the grounds that the
Defendant violated the Preliminary Injunction by continuing to solicit the
Plaintiff’s customers to change service providers to the Defendant. [Doc. 49
at 10-13]. The Preliminary Injunction prohibited the Defendant from
“redirecting, encouraging, or allowing any customer to change its service
provider or payment recipient from [the Plaintiff] to [the Defendant].” [Doc.
39 at 77]. That language attempted to preserve the status quo between the
parties by preventing the Defendant from tortiously interfering with the
Plaintiff’s customers. The parties, however, have struggled to apply this
wording of the Preliminary Injunction and have been unable to clearly
ascertain which customers are serviced by each. In light of this ambiguity of
application, and the Defendant’s belief that it was merely servicing its own
customers, the Court finds that it has not been shown by clear and
convincing evidence that the Defendant had actual or constructive
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knowledge that its continued solicitation of certain customers violated the
Preliminary Injunction.5
E. Sanctions
Having concluded that the Defendant’s actions constituted civil
contempt, the Court turns next to sanctions. The Court has the inherent
power to coerce compliance with its orders, and it may exercise that authority
by ordering a defendant to be incarcerated or to pay a fine, or both, until he
purges himself of his contempt. Int'l Union, United Mine Workers of Am. v.
Bagwell, 512 U.S. 821, 828 (1994). This Court has broad discretion to craft
civil contempt remedies. In re Gen. Motors Corp., 61 F.3d 256, 259 (4th Cir.
1995). Any remedy, however, “must be remedial and compensatory and,
unlike criminal contempt, nonpunitive.” Id.
Having reviewed the extensive evidence submitted by the parties
throughout this matter, the Court concludes that the imposition of sanctions
is necessary to compensate the Plaintiff for the Defendant’s failure to comply
with the Preliminary Injunction. Based on the volume of business of both
Plaintiff and Defendant, and considering what is warranted to encourage
5 Based on the arguments and evidence presented by the parties in this matter, the Court
will, contemporaneously herewith, modify the Preliminary Injunction to ensure that it does
not prevent the Defendant from servicing customers with whom it has valid contracts while
also protecting the Plaintiff from tortious interference with its contractual relations.
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compliance with the Preliminary Injunction, the Court finds that a sanction in
the amount of $5,000.00 per day for the period of violation is adequate.
Therefore, the Defendant will be sanctioned $5,000 for each day, starting
from May 29, 2021,6 that the Defendant continued to operate any of the
websites featuring “dmarcian” domain names following the entry of the
Preliminary Injunction. Such sanctions shall continue to be imposed until the
contempt is purged.
The Defendant has already provided some evidence of its attempts to
purge its contempt “voluntarily.” The parties will be given an additional
fourteen (14) days to provide any further evidence of the Defendant’s
compliance or non-compliance with the Preliminary Injunction, and the Court
will enter an order as to when or if the daily sanction ends.
The Court will also award the Plaintiff’s reasonable attorneys’ fees and
costs in litigating this matter. The Plaintiff shall file a brief within fourteen
days from the entry of this Order providing a breakdown of the hours incurred
in litigating this contempt proceeding and discussing the relevant factors for
6 The Plaintiff posted its bond on Thursday, May 27, 2021, after the close of business in
the Netherlands. Thus, the Defendant should have begun complying with the Preliminary
Injunction no later than the close of business on May 28, 2021. As such, the imposition
of sanctions shall begin on the first full day of the Defendant’s non-compliance, May 29,
2021.
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determining the reasonableness of a fee request in the Fourth Circuit. See
Grissom v. The Mills Corp., 549 F.3d 313, 321 (4th Cir. 2008).
Finally, it is this Court’s intention to try to stay in step with the Dutch
court proceedings and to provide proper and appropriate deference so that
the Dutch courts can adjudicate what is before them and this Court can
address what is properly pending here. To that end, the Court will direct the
Defendant to provide a copy of this Order to any and all Dutch courts in any
pending proceedings in which the Plaintiff and the Defendant are parties.
O R D E R
IT IS, THEREFORE, ORDERED that the Defendant is hereby held in
civil contempt of the Court’s Preliminary Injunction. [Doc. 39]. The
Defendant shall be pay to the Plaintiff Five Thousand Dollars ($5,000.00) for
each day after the entry of the Preliminary Injunction, starting from May 29,
2021, that the Defendant continues to use dmarcian.eu, dmarcian.nl,
dmarcian.co.uk, dmarcian.be, dmarcian.es, dmarcian.fr, dmarcian.at,
dmarcian.frl, dmarcian.io, dmarcian.jp, dmarcian.hk, or any other website
featuring the “dmarcian” domain name. The parties shall provide any further
evidence of the Defendant’s continued compliance or non-compliance with
the Preliminary Injunction within fourteen (14) days of the entry of this Order
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IT IS FURTHER ORDERED that the Defendant shall pay the Plaintiff’s
attorneys’ fees and costs in litigating this matter. The Plaintiff shall file a brief
detailing its reasonable costs, fees, and expenses incurred in this action
within fourteen (14) days of the entry of this Order.
IT IS FURTHER ORDERED that the Defendant shall provide a copy of
this Order to any and all Dutch courts in any proceedings in which the Plaintiff
and the Defendant are parties.
The Court will retain jurisdiction over the Show Cause Order to levy
fines, order compliance, and otherwise grant further relief as the Court finds
appropriate.
IT IS SO ORDERED.
Signed: August 11, 2021
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