Contract – IP suit barred by prior settlement

Where the parties resolved a prior state-court case via a settlement agreement that dismissed all possible counterclaims that could have been brought in that litigation, the district court did not err when it held this subsequent suit was barred by that broad release.

Background

In state court, the Ockers Company sued Clear Touch Interactive Inc.. The parties settled that case and agreed to dismiss all possible counterclaims that could have been brought in that litigation. But just weeks later, Clear Touch brought intellectual-property claims against Ockers in federal court. At summary judgment, the district court found that those claims were barred by the wide scope of the settlement agreement.

Shell company

 Clear Touch’s federal action centered primarily on the alleged infringement of their intellectual property when the Ockers defendants created a rival brand in TouchView Interactive, Inc.. The district court granted TouchView Interactive Inc.‘s motion for summary judgment, which argued that it was a mere shell organization that existed only on paper and, thus, that it did not actually own any trademarks or direct any activity that could infringe on another’s intellectual property rights.

This court nevertheless agrees with the district court. The evidence Clear Touch puts forward shows, at most, that Ockers was acting through its TouchView brand in conducting TouchView business.

Res judicata

The parties agreed to dismiss, and the state court actually dismissed, with prejudice all possible counterclaims that could have been brought in the state-court litigation. The plain language of the settlement agreement bars the Clear Touch complaint from moving forward. That conclusion is especially compelling in light of the parties’ evident intent in including this particular dismissal clause at the time and the context in which the settlement agreement was signed.

First, Ockers put on evidence that when the state-court litigation was filed, Clear Touch attorneys told Ockers that they were contemplating bringing federal intellectual-property counterclaims. Second, Ockers also put on evidence that Clear Touch had a pattern of settling claims on paper and then defying that settlement agreement by bringing intellectual-property claims weeks later.

Finally, knowing that Clear Touch was contemplating bringing intellectual-property claims and that it had a history of skirting settlement agreements, Ockers added the broad language dismissing all possible counterclaims. The district court was thus correct to conclude that Ockers was entitled to summary judgment on the res judicata issue.

Clear Touch nevertheless argues that the district court violated its procedural rights by changing course on res judicata so late in the game. The district court departed from its prior ruling for two permissible reasons: substantially different evidence emerged, and its prior ruling contained a clear error of law causing manifest injustice. And, independently, the district court did not abuse its discretion in revising its summary-judgment order because there was also clear error in the district court’s prior res judicata ruling that caused manifest injustice to Ockers.

Witnesses

Nearly three months after the discovery deadline, Clear Touch named Paul Diiorio as a witness for the first time. His late disclosure came as a surprise to Ockers, which was robbed of the opportunity to depose him and to properly prepare for cross-examining him at trial. Balancing those interests, the district court acted within its discretion in determining that there was no practical way to cure such a prejudice in time for trial.

Clear Touch also argues that the district court erred in denying its motion in limine to exclude Rita Bolt Barker from testifying at trial. Clear Touch argued that Barker’s dual role as attorney and fact witness would be unfairly prejudicial to Clear Touch and confusing for the jury This court disagrees. Barker withdrew from representation ahead of trial and acted solely as a fact witness.

Motions

After the jury returned its verdict, the district court denied Clear Touch’s motion for a new trial. Clear Touch appeals, primarily on the grounds that the court’s late res judicata ruling “irreparably prejudiced Clear Touch and denied it a fair trial.” While the late ruling caused some prejudice to Clear Touch in the preparation of its defense at trial, when evaluating the trial as a whole, this court does not believe that the court abused its discretion in conducting the trial.

And Clear Touch has waived any argument that it should have been given more time to prepare or an entirely new jury—because it never asked for such relief below. To the extent the late ruling caused any prejudice by influencing the jury, the district court did not abuse its discretion in mitigating that prejudice with a curative instruction.

Affirmed.

Concurring/dissenting opinion

Rushing, J., concurring in part and dissenting in part:

I agree with the majority that the district court properly granted summary judgment to TouchView Interactive Inc. on all claims. I also agree that the district court did not abuse its discretion in ruling on the two motions in limine, and that we should affirm the district court’s denial of Clear Touch’s motions for judgment as a matter of law and a new trial. Regarding the res judicata ruling, however, I would reverse in part.

Clear Touch Interactive, Inc. v. The Ockers Company, Case Nos. 25-1304, 25-1374, April 1, 2026. 4th Cir. (Wynn), from DSC at Greenville (McDonald). Joseph Owen Smith for Appellant. Gregory J. English for Appellees. VLW 026-2-113. 38 pp.

Full-Text Opinion

VLW 026-2-113
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