Court Opinion

ID: 1005947
Source: CourtListenerOpinion
Date Created: 2013-07-04 19:04:02.377636+00
Date Added: 2024-06-11T15:26:57.831543
License: Public Domain

UNPUBLISHED

UNITED STATES COURT OF APPEALS
                FOR THE FOURTH CIRCUIT

CANDLE FACTORY, INCORPORATED;             
CHERYL HANNANT,
               Plaintiffs-Appellees,
                   v.
TRADE ASSOCIATES GROUP, LIMITED,                   No. 01-1037
              Defendant-Appellant,
                and
TERRY’S VILLAGE,
                             Defendant.
                                          
            Appeal from the United States District Court
       for the Eastern District of North Carolina, at Raleigh.
              Terrence W. Boyle, Chief District Judge.
                        (CA-00-15-2-BO2)

                         Argued: October 29, 2001

                        Decided: November 30, 2001

     Before LUTTIG, TRAXLER, and KING, Circuit Judges.

Affirmed by unpublished per curiam opinion. Judge Luttig wrote an
opinion concurring in the judgment.

                               COUNSEL

ARGUED: Michael B. Allen, BARNES & THORNBURG, Chicago,
Illinois, for Appellant. Joel David Joseph, Washington, D.C., for
2           CANDLE FACTORY v. TRADE ASSOCIATES GROUP
Appellees. ON BRIEF: Steven B. Epstein, HUNTON & WIL-
LIAMS, Raleigh, North Carolina, for Appellant.

Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).

                             OPINION

PER CURIAM:

   On December 14, 2000, the district court for the Eastern District
of North Carolina issued a preliminary injunction against certain con-
duct of defendants Trade Associates Group, Limited and Terry’s Vil-
lage. By that order, the defendants were directed to cease and desist
from violating the copyright owned by Candle Factory, Incorporated
and Cheryl Hannant for seashell-shaped candles. Trade Associates
Group ("TAG") appeals to this Court from the entry of the injunction
order, maintaining that it should be vacated. As explained below, the
district court committed no reversible error, and we affirm.

                                  I.

   In January 1993, plaintiff Cheryl Hannant ("Ms. Hannant"), doing
business as Candle Factory, obtained a copyright for seashell-shaped
candles — Copyright Registration VAU 245-286 — from the Copy-
right Office of the United States. Ms. Hannant then incorporated
plaintiff Candle Factory, Inc. in the State of North Carolina, and she
assigned Candle Factory all her rights in the copyright relating to the
seashell-shaped candles. Candle Factory manufactures and markets its
seashell-shaped candles in North Carolina.

   TAG is a corporate entity headquartered in the State of Illinois. It
conducts its business, as a retailer of candles and other household-
related products, on a nationwide basis, including in North Carolina.
In the fall of 1999, TAG added seashell and starfish-shaped candles
to its product line. TAG’s candles are made for it by a company
             CANDLE FACTORY v. TRADE ASSOCIATES GROUP                  3
known as Will & Baumer at a manufacturing facility in Mexico. Can-
dle Factory and Ms. Hannant (collectively "Candle Factory") allege
in this injunction proceeding that TAG’s manufacturing and market-
ing of seashell-shaped candles infringes upon their copyright. TAG
denies these allegations, contending that its candles are non-
infringing, and that they were independently created from molds of
actual seashells and starfish.

   On November 15, 1999, Candle Factory forwarded TAG a letter
advising that "Candle Factory has a copyright on the sea-shell candles
that you are showing in your 2000 Catalogue." J.A. 46. This letter fur-
ther asserted that, unless a settlement could be reached between Can-
dle Factory and TAG within ten days, TAG would be made a
defendant in a copyright-infringement lawsuit being pursued by Can-
dle Factory in the Eastern District of North Carolina against an unre-
lated business called Two’s Company, Inc. On January 28, 2000,
Candle Factory sent TAG another letter, with which it enclosed a
copy of its copyright. That letter asserted that, if TAG would cease
the marketing and selling of its allegedly-infringing seashell-shaped
candles, Candle Factory would abandon its potential claims for dam-
ages against TAG.

   In response to the contentions and assertions made in these letters,
TAG promptly filed a declaratory judgment action against Candle
Factory in the Northern District of Illinois ("Illinois Proceeding"). On
March 30, 2000, Candle Factory moved to dismiss the Illinois Pro-
ceeding for lack of jurisdiction and improper venue, asserting that it
conducted no business in Illinois. At the same time, Candle Factory
filed its complaint in the Eastern District of North Carolina for declar-
atory and injunctive relief against TAG and Terry’s Village. Candle
Factory alleged therein, inter alia, that the defendants were infringing
on its copyright for seashell-shaped candles ("North Carolina Pro-
ceeding").

   Thereafter, on June 26, 2000, TAG filed a motion in the North Car-
olina Proceeding seeking to dismiss, stay, or transfer that lawsuit to
the Northern District of Illinois. In response, Candle Factory agreed
to a stay in the North Carolina Proceeding while the Illinois court
considered Candle Factory’s motion to dismiss. Accordingly, the
North Carolina district court, on August 10, 2000, entered a sixty-day
4             CANDLE FACTORY v. TRADE ASSOCIATES GROUP
stay of proceedings. On September 13, 2000, before the stay had
expired, the Illinois Proceeding was dismissed.

   In October 2000, TAG filed its answer in the North Carolina Pro-
ceeding, and Candle Factory promptly moved, pursuant to Rule 65 of
the Federal Rules of Civil Procedure, for entry of a temporary
restraining order ("TRO") against TAG and Terry’s Village. The dis-
trict court, on November 20, 2000, conducted a hearing on Candle
Factory’s TRO request, and it decided to convert the motion into a
request for a preliminary injunction. Thereafter, on December 14,
2000, the district court issued its preliminary injunction order, Candle
Factory, Inc. v. Trade Assocs. Group, Ltd., No. 2:00-CV-15-BO(2)
(E.D.N.C. Dec. 14, 2000) ("Preliminary Injunction"). In its order,
from which this interlocutory appeal is taken, the court found that
"the balance of hardship in this case favors the Plaintiffs," and con-
cluded that the "Plaintiffs have demonstrated a likelihood of irrepara-
ble harm that outweighs any harm to Defendants." Id. at 3. The
Preliminary Injunction directed TAG and Terry’s Village to "cease
and desist from violating [Candle Factory’s] copyright on the seashell
candles." Id.

   TAG promptly sought appellate review of the Preliminary Injunc-
tion in this Court and, on December 18, 2000, it filed its notice of appeal.1
It also promptly moved in the district court for a stay of the Prelimi-
nary Injunction pending appeal, which was denied on March 30,
2001. We possess jurisdiction over this interlocutory appeal pursuant
to 28 U.S.C. § 1292(a) (courts of appeals possess jurisdiction over
appeals from "[i]nterlocutory orders of the district courts of the
United States . . . granting . . . injunctions").

                                     II.

   This Court reviews "the grant or denial of a preliminary injunction
for abuse of discretion, recognizing that ‘preliminary injunctions are
extraordinary remedies involving the exercise of very far-reaching
power to be granted only sparingly and in limited circumstances.’"
Microstrategy Inc. v. Motorola, Inc., 245 F.3d 335, 339 (4th Cir.
    1
   Terry’s Village has not joined in TAG’s appeal of the Preliminary
Injunction.
             CANDLE FACTORY v. TRADE ASSOCIATES GROUP                   5
2001) (quoting Direx Israel, Ltd. v. Breakthrough Med. Corp., 952
F.2d 802, 806 (4th Cir. 1991)). An abuse of discretion occurs when
the district court "appl[ies] an incorrect preliminary injunction stan-
dard, . . . rest[s] its decision on a clearly erroneous finding of a mate-
rial fact, or . . . misapprehend[s] the law with respect to underlying
issues in litigation." Quince Orchard Valley Citizens Ass’n, Inc. v.
Hodel, 872 F.2d 75, 78 (4th Cir. 1989) (internal quotations omitted).
We review for clear error a district court’s findings of fact in connec-
tion with the issuance of a preliminary injunction. Gilliam v. Foster,
61 F.3d 1070, 1078 n.5 (4th Cir. 1995) (citing Multi-Channel TV
Cable Co. v. Charlottesville Quality Cable Operating Co., 22 F.3d
546, 552 (4th Cir. 1994)).

                                   III.

   In order to secure entry of a preliminary injunction order, an appli-
cant must satisfy the four-factor test established by this Court in
Blackwelder Furniture Co. of Statesville, Inc. v. Selig Mfg. Co., Inc.,
550 F.2d 189 (4th Cir. 1977). The four Blackwelder factors are: (1)
likelihood of irreparable harm to the plaintiff if the preliminary
injunction is denied; (2) likelihood of harm to the defendant if the
request is granted; (3) likelihood that the plaintiff will succeed on the
merits; and (4) the public interest. Id. at 193. In applying Black-
welder, a court must "balance the ‘likelihood’ of irreparable harm to
the plaintiff against the ‘likelihood’ of harm to the defendant." Micro-
strategy Inc., 245 F.3d at 339 (quoting Blackwelder, 550 F.2d at 195).
If this balance of hardships is in the plaintiff’s favor, then "[i]t will
ordinarily be enough that the plaintiff has raised questions going to
the merits so serious, substantial, difficult, and doubtful, as to make
them fair ground for litigation." Id. (quoting Blackwelder, 550 F.2d
at 195). In contrast, if the balance of hardships is substantially equal
as between the plaintiff and defendant, then "the probability of suc-
cess begins to assume real significance, and interim relief is more
likely to require a clear showing of a likelihood of success." Id. (quot-
ing Direx Israel, Ltd. v. Breakthrough Med. Corp., 952 F.2d 802, 808
(4th Cir. 1991)).

                                   A.

  In its appeal of the Preliminary Injunction, TAG first contends that
Candle Factory delayed too long in seeking injunctive relief and, as
6            CANDLE FACTORY v. TRADE ASSOCIATES GROUP
a result, the district court abused its discretion in finding that Candle
Factory would suffer irreparable injury unless a preliminary injunc-
tion issued. TAG maintains that "Candle Factory’s unexplained and
unexcused one-year delay in seeking a TRO or a preliminary injunc-
tion defeats its claim of irreparable harm as a matter of law." Appel-
lant’s Br. at 11. In support of this contention, TAG directs this
Court’s attention to our decision in Quince Orchard Valley Citizens
Ass’n, Inc. v. Hodel, 872 F.2d 75 (4th Cir. 1989), in which we recog-
nized that an inordinate delay in initiating a preliminary injunction
proceeding may "indicate an absence of the kind of irreparable harm
required to support a preliminary injunction." Id. at 80. In Quince
Orchard, we upheld the denial of a preliminary injunction request
when the plaintiffs had waited nine months before seeking injunctive
relief. Id. The central points underlying our decision were (1) the dis-
trict court’s discretionary denial of the injunctive relief, (2) the time
sensitive nature of the project involved, and (3) the fact that more
expeditious action by the plaintiffs would have avoided major disrup-
tions and increased costs. Id.

   Our decision in Quince Orchard instructs that any delay attribut-
able to plaintiffs in initiating a preliminary injunction request, coupled
with prejudicial impact from the delay, should be considered when
the question of irreparable harm to plaintiffs is balanced against harm
to defendants.2 Despite TAG’s protestations otherwise, Quince
Orchard simply does not require us to find, as a matter of law, that
   2
     Two other circuits have expressly considered the delay issue and are
in accord with Quince Orchard. The Ninth Circuit has recognized that
"[a] delay in seeking a preliminary injunction is a factor to be considered
in weighing the propriety of relief." Lydo Enters. v. City of Las Vegas,
745 F.2d 1211, 1213, 1213-14 (9th Cir. 1984) ("We would be loath to
withhold relief solely on that ground, but we do give that fact consider-
ation in measuring the claim of urgency."). The Tenth Circuit has also
considered whether a plaintiff’s delay in seeking injunctive relief under-
mined its claim of irreparable injury. In Kansas Health Care Ass’n, Inc.
v. Kansas Dep’t of Soc. & Rehab. Servs., 31 F.3d 1536 (10th Cir. 1994),
that court determined that "[w]hile delay can undermine a claim of irrep-
arable harm," id. at 1543, it concluded that a preliminary injunction was
proper because the plaintiff had tried to reach a settlement with the
defendant and acted within three months of failing to reach such a settle-
ment. Id. at 1544.
             CANDLE FACTORY v. TRADE ASSOCIATES GROUP                    7
the plaintiff suffered no irreparable injury because it delayed in initi-
ating its request for a preliminary injunction.

   In further support of its position, TAG, pursuant to Local Rule 36(c),3
cites our decision in Magnussen Furniture, Inc. v. Collezoine Europa
USA, Inc., No. 96-1917, 1997 U.S. App. Lexis 14861, at *10 n.6 (4th
Cir.). Reliance on the unpublished authority of Magnussen Furniture,
however, is inappropriate. Our Quince Orchard decision constitutes
published authority on the delay issue and, in the words of Local Rule
36(c), it "would serve as well." In any event, Magnussen Furniture
is of no assistance to TAG in this appeal.

   In Magnussen Furniture, we affirmed the denial of a preliminary
injunction because plaintiff’s products appeared to be non-
copyrightable. Id. at *9. As additional support for our decision, we
observed that the plaintiff was not entitled to a preliminary injunction
because it "did not seek copyright protection for its own line of tables
for an additional 16 months." Id. at *10 n.6. Besides not constituting
precedent in this Court, Magnussen Furniture is distinguishable from
this case on its facts. Unlike in Magnussen Furniture, the district
court in this case specifically determined that the manufacture and
sale of Candle Factory’s seashell-shaped candles were subject to
copyright protection. Moreover, we must observe that Candle Facto-
ry’s delay in initiating its injunction proceedings was substantially
less than the delay involved in Magnussen Furniture, and that the
delay at issue in this case did not relate to a failure to seek copyright
protection.4

   TAG also maintains on appeal that the district court committed
clear error in finding that Candle Factory would suffer irreparable
harm unless a preliminary injunction was issued. We are unable to
  3
    Our Local Rule 36(c) provides that "[i]f counsel believes . . . that an
unpublished disposition of any court has precedential value in relation to
a material issue . . . and that there is no published opinion that would
serve as well, such disposition may be cited." 4th Cir. R. 36(c).
  4
    A substantial portion of the delay in this case is satisfactorily
explained by TAG’s filing of its motion to dismiss, stay, or transfer the
North Carolina Proceeding, resulting in the sixty-day stay being entered
therein with Candle Factory’s consent.
8                CANDLE FACTORY v. TRADE ASSOCIATES GROUP
agree. Although Candle Factory was slow in initiating its request for
injunctive relief, its delay, as previously discussed, does not as a mat-
ter of law preclude a finding by the court of irreparable harm. More-
over, the reasons for Candle Factory’s delay are partially explained,
and, importantly, TAG does not contend that the delay resulted in any
prejudice to its interests. By contrast, the record reveals an ample
basis for the finding that Candle Factory would be irreparably harmed
in the absence of injunctive relief. For example, the record shows that
Candle Factory possessed a valid copyright for seashell-shaped can-
dles. The record also contains evidence supporting the contention that
TAG’s seashell-shaped candles infringe upon Candle Factory’s copy-
right, and there is evidence that all of Candle Factory’s business is
derived from its sale of seashell-shaped candles. See Preliminary
Injunction at 3 (finding that TAG "ha[s] produced a number of can-
dles that are identical in shape and coloring to the candles produced
by [Candle Factory]"). Thus, when the record is examined in its
entirety and in context, the court’s finding that Candle Factory would
suffer irreparable harm in the absence of a preliminary injunction was
not clearly erroneous.

                                       B.

   As its second basis for vacating the Preliminary Injunction, TAG
maintains that the district court abused its discretion by failing to con-
sider the harm to TAG from issuance of a preliminary injunction. In
support of this position, TAG contends that the court’s decision to fix
the security for the injunction, mandated by Rule 65(c) of the Federal
Rules of Civil Procedure, at the nominal sum of $500 indicates a lack
of adequate consideration by the court of the harm the Preliminary
Injunction would cause TAG.5 We are again unable to agree with
TAG. The evidence of record amply supports the court’s finding that
Candle Factory possessed a valid copyright upon which TAG’s
    5
   Rule 65(c) of the Federal Rules of Civil Procedure provides in rele-
vant part as follows:
        No . . . preliminary injunction shall issue except upon the giving
        of security by the applicant, in such sum as the court deems
        proper, for the payment of such costs and damages as may be
        incurred or suffered by any party who is found to have been
        wrongfully enjoined or restrained.
             CANDLE FACTORY v. TRADE ASSOCIATES GROUP                 9
seashell-shaped candles infringed. As such, TAG had no right to sell
infringing candles in the first instance. In this context, the district
court’s decision to fix a bond in the sum of $500 was an appropriate
exercise of its discretion, and its finding that TAG would suffer little
harm if enjoined from further selling its infringing seashell-shaped
candles is not clearly erroneous. See Hoechst Diafoil Co. v. Nan Ya
Plastics Corp., 174 F.3d 411, 421 n.3 (4th Cir. 1999) ("Where the dis-
trict court determines that the risk of harm is remote, or that the cir-
cumstances otherwise warrant it, the court may fix the amount of the
bond accordingly. In some circumstances, a nominal bond may suf-
fice.") (internal citation omitted).

                                  C.

   TAG, as its third basis for appeal, contends that the district court
abused its discretion by finding that "the balance of hardship in this
case favors the Plaintiffs," and that the "Plaintiffs have demonstrated
a likelihood of irreparable harm that outweighs any harm to Defen-
dants." Preliminary Injunction at 3. Once again, we are unable to
agree. As discussed above, the evidence amply supports the court’s
finding that Candle Factory would suffer irreparable harm in the
absence of injunctive relief, and also amply supports its finding that
any injury to TAG from issuance of the Preliminary Injunction would
be slight. The district court did not abuse its discretion in balancing
the harms to the parties and in concluding that the balance tipped in
favor of Candle Factory.

                                  D.

   Finally, TAG maintains that the court abused its discretion by
improperly concluding that Candle Factory was likely to succeed on
the merits of its copyright claim. TAG’s position on this point is also
faulty because, when the balance of hardships is in a plaintiff’s favor,
then "[i]t will ordinarily be enough that the plaintiff has raised ques-
tions going to the merits so serious, substantial, difficult, and doubt-
ful, as to make them fair ground for litigation." Microstrategy Inc.,
245 F.3d at 339 (internal quotations omitted). Candle Factory has suf-
ficiently met this burden. It has shown, inter alia, that it possesses a
valid copyright for seashell-shaped candles and that TAG’s compet-
ing candles infringe upon this copyright.
10          CANDLE FACTORY v. TRADE ASSOCIATES GROUP
                                 IV.

  Because the district court did not abuse its discretion in awarding
Candle Factory the Preliminary Injunction against TAG, we affirm.

                                                         AFFIRMED

LUTTIG, Circuit Judge, concurring in the judgment:

   Because I believe that our Circuit’s precedent of Blackwelder Fur-
niture Co. of Statesville, Inc. v. Seilig Manufacturing Co., Inc., 550
F.2d 189 (4th Cir. 1977), cannot be reconciled with the controlling
precedent from the Supreme Court of the United States governing the
standards appropriate for issuance and appellate review of injunction
judgments, I concur only in the court’s judgment, not in its opinion.