Wudi Indus. (Shanghai) Co. v. Wong

70 F.4th 183

WUDI INDUSTRIAL (SHANGHAI) CO., LTD., Plaintiff - Appellant, v. Wai L. WONG, Defendant - Appellee,andGT Omega Racing Ltd., Counter Claimant - Appellee.

No. 22-1495

No. 22-1662

United States Court of Appeals, Fourth Circuit

Argued: December 8, 2022

Decided: June 5, 2023

Appeals from the United States District Court for the Eastern District of Virginia, at Alexandria. Claude M. Hilton, Senior District Judge. (1:20-cv-00908-CMH-TCB)

ARGUED: Gaspare Joseph Bono, DENTONS US LLP, Washington, D.C., for Appellant. Craig Crandall Reilly, LAW OFFICE OF CRAIG C. REILLY, Alexandria, Virginia, for Appellees. ON BRIEF: Derek A. Auito, Washington, D.C., Tony K. Lu, DENTONS US LLP, Boston, Massachusetts, for Appellant. Catherine Simmons-Gill, OFFICE OF CATHERINE SIMMONS-GILL, LLC, Chicago, Illinois; Lisa L. Clay, LISA L. CLAY, ATTORNEY AT LAW, Wheaton, Illinois, for Appellees.

Before GREGORY, Chief Judge, and KING and RUSHING, Circuit Judges.

Vacated and remanded by published opinion. Judge King wrote the majority opinion, in which Chief Judge Gregory joined. Judge Rushing wrote a dissenting opinion.

KING, Circuit Judge:

In these consolidated appeals from the Eastern District of Virginia, plaintiff Wudi Industrial (Shanghai) Co., Ltd. challenges two adverse rulings made by the district court in favor of defendant Wai L. Wong and his business entity, GT Omega Racing, Ltd. (collectively "GTOR"). As explained below, we agree with Wudi's primary contention that the district court's challenged rulings constitute awards of injunctive relief in favor of GTOR and against Wudi. Secondly, we also agree that the challenged rulings failed to comport with the applicable Rules of Civil Procedure and controlling precedent. Accordingly, because the district court erred in awarding injunctive relief in these circumstances, we vacate the challenged rulings and remand for further proceedings.

I.

This litigation arises out of a contentious trademark dispute between Wudi and GTOR, which are Asian-centered business entities that compete in the marketing of video gaming chairs and other products. In March 2017, Wudi obtained from the United States Patent and Trademark Office ("USPTO") a registration for the stylized word mark "GTRACING." For its part, GTOR claimed that it already owned an earlier use of a similar word mark — that is, "GT OMEGA RACING" — and challenged Wudi's registration of the "GTRACING" word mark in cancellation proceedings before a USPTO component called the Trademark Trial and Appeals Board (the "Board"). In June 2020, the Board ruled in favor of GTOR, concluding that Wudi's use of the "GTRACING" word mark encroached on GTOR's earlier use of its own "GT OMEGA RACING" word mark. Seeking de novo review of the Board's cancellation ruling, Wudi initiated this civil action in the district court in August 2020, pursuant to 15 U.S.C. § 1071(b)(1) (specifying that a dissatisfied party in a trademark dispute may a file civil action in a district court, "unless appeal has been taken to [the] United States Court of Appeals for the Federal Circuit").

In May 2021, the parties reached a global confidential settlement of their trademark dispute and entered into a concurrent-use agreement (the "Agreement"). The Agreement established the parties' rights and restrictions with respect to the worldwide promotion, advertisement, and sale of their gaming products. Relevant here, the Agreement assigned to Wudi the right to use the "GTRACING" word mark in all global markets — except within a so-called "European Carve Out," which is a geographical area comprised of 53 named countries. More specifically, paragraph 6 of the Agreement provided that, within the European Carve Out, Wudi must refrain from purchasing "ad-words from Google or any other search engine or from Amazon or any other shopping site . . . and will not use on Facebook or any other social media platform . . . any terms that include (with or without other words) any of the following: ['GT RACING'] or ['GTRACING']" See J.A. 162.¹ In exchange for Wudi's acquisition of those rights to the "GTRACING" word mark, the Agreement required Wudi to pay to GTOR the sum of $4,500,000. The Agreement provided that, once those conditions were satisfied, a stipulated final judgment would be entered by the district court to resolve the trademark dispute underlying this litigation.

To afford the parties sufficient time to comply with the Agreement, the district court in June 2021 granted the parties' joint motion to stay the litigation proceedings, pending entry of the stipulated final judgment. During that compliance period, however, a dispute arose in January 2022 regarding Wudi's alleged use of the "GTRACING" word mark within the 53 countries of the European Carve Out. Ultimately, GTOR filed with the court in April 2022 a motion for enforcement of the Agreement, alleging therein that Wudi was in breach of the Agreement's "ad-words" provision. More specifically, GTOR's motion to enforce maintained that some of Wudi's marketing and promotional content — which contained the "GTRACING" word mark — was yet impermissibly accessible within the European Carve Out, in contravention of paragraph 6 of the Agreement.

On April 29, 2022, the district court granted GTOR's motion to enforce the Agreement and — instead of entering the stipulated final judgment — ordered Wudi to "immediately cease" certain conduct. See Wudi Indus. (Shanghai) Co. v. Wong, No. 1:20-cv-00908, at 2 (E.D. Va. Apr. 29, 2022), ECF No. 103, 2022 WL 2187419 (the "First Order"). Pursuant to the court's First Order, Wudi was — within 7 days — to "take down all posts [containing the "GT RACING" word mark] . . . on its proprietary social media platforms that are accessible in the European Carve Out," and was also to "immediately cease from making further posts on its proprietary social media platforms that are accessible in the European Carve Out." Id. at 1-2. The First Order declared that Wudi was to "direct all entities and individuals with whom [it] has a business relationship to take down all posts, whenever made, on social media platforms that are accessible in the European Carve Out." Id. at 2. Importantly, the First Order further provided that, if Wudi failed to comply with those specific directives, the court would "enforce [the First Order] through findings of contempt." Id. at 2.

Notwithstanding the foregoing enjoining language, the district court did not make any findings of fact or conclusions of law in support of the First Order, as mandated by Federal Rules of Civil Procedure 52 and 65. See Fed. R. Civ. P. 52, 65 (requiring that district court make findings of fact and conclusions of law when awarding injunctive relief). Furthermore, the First Order did not contain any analysis indicating that the court had applied and evaluated the four-factor eBay v. MercExchange test, which the Supreme Court has required to be satisfied before a trial court can award injunctive relief. See eBay Inc. v. MercExchange, LLC, 547 U.S. 388, 391, 126 S.Ct. 1837, 164 L.Ed.2d 641 (2006) (identifying factors that party must satisfy in order to obtain injunctive relief).

On May 5, 2022, Wudi noted an interlocutory appeal of the First Order, which was filed as Appeal No. 22-1495 in this Court. Wudi then promptly sought from this Court a stay of the First Order pending its appeal, despite not having first filed such a request with the district court, nor otherwise showing or seeking to show that it would have been "impracticable" to do so. See Fed. R. App. P. 8 (requiring that "[a] party must ordinarily move first in the district court for . . . a stay of the judgment or order of a district court pending appeal," unless "moving first in the district court would be impracticable").

On May 13, 2022, because our appellate jurisdiction turned on whether the district court had actually "grant[ed] . . . [an] injunction" for purposes of 28 U.S.C. § 1292(a)(1), we ordered a limited remand in Appeal No. 22-1495. We therein requested the district court to clarify whether the First Order constituted an award of preliminary injunctive relief. If the First Order afforded such relief, we sought the court's compliance with Rules 52 and 65, in addition to a proper assessment of the four eBay factors. Given the circumstances, we retained jurisdiction in Appeal No. 22-1495 and entered a temporary stay of the First Order, to remain in effect during the limited remand proceedings.

On June 2, 2022, the district court entered another order stating that — despite the First Order's utilization of specific enjoining language — GTOR had not requested an injunction and the First Order did not constitute a preliminary injunction. See Wudi Indus. (Shanghai) Co. v. Wong, No. 1:20-cv-00908, at 2, 2022 WL 2187418 (E.D. Va. June 2, 2022), ECF No. 118 (the "Second Order"). Instead of offering its legal reasoning underpinning that conclusion, the Second Order stated that the First Order had been a grant of specific performance under Virginia law. At that juncture, the court entered the stipulated final judgment, again without any legal reasoning or other explanation in support thereof.

Wudi promptly appealed the Second Order in June 2022, which was filed as Appeal No. 22-1662 in this Court. Upon Wudi's request, we consolidated the two appeals. On June 28, 2022, although Wudi had again not previously moved for a stay of the challenged rulings in the district court, a divided panel of our Court granted a stay to Wudi of the challenged rulings pending resolution of these appellate proceedings.

II.

A.

As a threshold matter, in our May 2022 order of limited remand, we asked whether the First Order constituted an "[i]nterlocutory order . . . granting" an injunction, which may have permitted Wudi to pursue an interlocutory appeal under 28 U.S.C. § 1292(a)(1). Despite those initial jurisdictional concerns, we are now satisfied that the Second Order — which was accompanied by the entry of the...