Virginia Lawyers Weekly VA Lawyers Weekly
Where a Dutch entity based in the Netherlands argued the North Carolina district court impermissibly applied United States and North Carolina law extraterritorially when it preliminarily enjoined certain conduct, but the injunction addressed conduct affecting American customers, the argument failed.
Background
dmarcian Inc., or dInc, is headquartered in North Carolina. In 2016, it negotiated an agreement authorizing dmarcian Europe BV, or dBV, a Dutch entity based in the Netherlands, to sell dInc’s software in Europe and Africa.
After an initially fruitful partnership, disagreements arose in 2019, ultimately prompting two suits by dBV in the Netherlands and the present suit by dInc in the United States. The district court exercised personal jurisdiction over dBV and declined to dismiss for forum non conveniens. The district court also issued a preliminary injunction limiting dBV’s use of dInc’s intellectual property. The district court later held dBV in contempt for violating the injunction.
Jurisdiction
A court “may exercise personal jurisdiction over a foreign corporation only if: (1) such jurisdiction is authorized by the long-arm statute of the state in which the district court sits; and (2) application of the relevant long-arm statute is consistent with the Due Process Clause of the Fourteenth Amendment.”
The district court found North Carolina General Statute § 1-75.4(4)(a) authorized personal jurisdiction over dBV. Under § 1-75.4(4)(a), courts have jurisdiction “in any action claiming injury to person or property within [North Carolina] arising out of an act or omission outside this State by the defendant, provided in addition that at or about the time of the injury either [s]olicitation or services activities were carried on within this State by or on behalf of the defendant.”
The district court was correct. dInc is a North Carolina business claiming injury from acts abroad by dBV at the time dInc provided services on behalf of dBV. Further, dInc claimed that the injury was felt at home due to confusion among its American customers, in part from dBV’s “virtually identical” websites. Last, dInc alleged that it sustained this injury while providing services “on behalf” of dBV essential to their work together.
Further, North Carolina General Statute § 1-75.4(5)(b) states that courts shall have jurisdiction in any action which “[a]rises out of … services actually performed for the defendant by the plaintiff within [North Carolina] if such performance within this State was authorized or ratified by the defendant.” Here, dInc “actually performed” services in North Carolina that were “authorized or ratified by” dBV.
And because dBV “purposefully reached out” by “entering a contractual relationship that envisioned continuing and wide-reaching contacts” in North Carolina, dBV thus purposefully availed itself of the protections of North Carolina law, out of which the claims arose.
‘Forum non conveniens’
The Supreme Court has established a three-part framework for forum non conveniens in which the moving party must show that an “alternative forum is: 1) available; 2) adequate; and 3) more convenient in light of the public and private interests involved.” The district court found here that dBV failed to propose an adequate alternative forum because its proffered forum in the Netherlands could not adjudicate trademark claims arising under United States law. The district court further stated that the “private and public interests to be weighed in considering a forum non conveniens motion also weigh against” dBV. This court sees no abuse of discretion in this holding.
Preliminary injunction
The district court issued a preliminary injunction as to dInc’s copyright, trademark, trade secret and tortious interference claims. dBV contends that the district court impermissibly applied United States and North Carolina law extraterritorially. And dBV maintains that the district court’s decision was premature in light of pending litigation in the Netherlands.
Neither argument proves availing. The relevant laws all concern dBV’s conduct, which notably touched American customers. And the ongoing Dutch case did not preclude the district court’s injunction, because no conceivable construction of dBV’s 2016 license would have authorized its actions on a global scale.
Although the district court did not abuse its discretion by holding dBV in contempt of its preliminary injunction, it did not sufficiently specify how its $5,000-per-day sanction approximated “losses incurred” to dInc. The parts of the district court’s orders referring to a specific amount of sanctions is reversed and remanded for further analysis and calculation on this point.
Affirmed in part and vacated and remanded in part.
dmarcian Inc. v. dmarcian Europe BV, Case Nos. 21-1721, 21-2005, 22-1728, Feb. 14, 2023. 4th Cir. (Wilkinson), from WDNC at Asheville (Reidinger). Samuel B. Hartzell for Appellant. Pamela Suzanne Duffy and David Anthony Dorey for Appellee. VLW 023-2-040. 43 pp.
