Case of the Day: dmarcian v. DMARC Advisor

Parts of a DMARC record
Credit: Flowmailer (CC BY-SA)

The case of the day is dmarcian, Inc. v. DMARC Advisor BV (W.D.N.C. 2023). One of the big problems in email is distinguishing real emails from emails that appear to come from a particular domain but are fake. I can set up an email server to announce that the emails it sends are from any domain I wish. So how can you be confident that the emails you receive from, if you subscribe to my newsletters, really come from me and not coming from “some %#$! signing [my] name to stupid letters?1 The basic answer is that the owner of a domain can publish DNS records that identify what email servers are allowed to send emails from the domain, and it can also publish DNS records that allow the recipient of an email to verify cryptographically that an email was authorized by the owner of the domain. These methods didn’t totally solve the problem, and so the Powers that Be created a new DNS record, DMARC (“Domain-based Message Authentication, Reporting & Conformance”), which tells email receivers what to do with emails that they receive that fail these tests: let them through to your inbox, or else send them to your junk folder or worse. All of this takes place behind the scenes and you never have to worry about it, unless, like me, you have a website that sends newsletters and you are too cheap or dorky to pay someone to take care of this for you.

Today’s case was between two companies involved with DMARC. They had a 2016 contract governing the ownership, licensing, and distribution of certain software. But they got into a dispute, and dmarcian cut off DMARC Advisor’s access to the software. It restored access shortly thereafter. Then dmarcian’s principal, Tim Draegen, himself a DMARC Advisor shareholder, sought a meeting of DMARC Advisor’s shareholders to remove DMARC Advisor’s minority shareholder, TDX, as director of DMARC Advisor. TDX sought an injunction in the Enterprise Court of the Amsterdam Appellate Court to block the meeting. Both Draegen and TDX asked the court to investigate DMARC Advisor’s affairs in order to sort ought the software dispute. The court agreed and ordered the investigation. When dmarcian suggested it would again block DMARC Advisor’s access to the software, DMARC Advisor sought an injunction from the District Court of Rotterdam. Draegen and dmarcian didn’t appear for the hearing, and the court defaulted them and ordered them to grant DMARC Advisor access to the software.

Then dmarcian brought claims for copyright and trademark infringement in the Western District of North Carolina. It sought and obtained an injunction against DMARC Advisor, and the court also denied DMARC Advisor’s motion to dismiss. But meanwhile, in the Netherlands, the court-ordered investigation concluded that dmarcian was wrong, under Dutch law, to deny DMARC Advisor access to the software. It was likely, the investigation concluded, that the parties had joint ownership of the copyright of the software.

This Solomonic decision obviously pleased no one: DMARC Advisor sued in Rotterdam for a declaration of copyright ownership under Dutch law. dmarcian asked the Dutch court to stay proceedings in light of the pending US lawsuit. DMARC Advisor opposed the request on the grounds that the court could only adjudicate the ownership of the US copyright and trademark, not the ownership of the Dutch copyright and trademark. While this request was pending, DMARC Advisor sought and obtained a “mirror image” injunction, that is, an injunction that enjoined dmarcian from doing what the US judge’s injunction had enjoined DMARC Advisor from doing. The court then denied dmarcian’s request for a stay. But the Court of Appeals of the Hague reversed the injunction against dmarcian.

After all of this warm-up, dmarcian asked the US court to enjoin the Dutch proceedings. The court began by noting a circuit split in the comity standard to be applied. Some courts are more conservative than others in issuing anti-suit injunctions, though the Fourth Circuit, the relevant circuit in this case, had not established a standard. The court did not, however, decide the standard to be applied. Instead, it focused on a threshold issue: anti-suit injunctions are only appropriate when the two cases are dealing with the same issues. But due to the relentlessly territorial nature of IP rights, a claim of infringement of US rights is not the same as a claim of infringement of Dutch rights. The court went on to suggest that comity would not favor the injunction, noting the risk inherent in parallel proceedings that the two courts would issue dueling anti-suit injunctions, and in general, giving a good statement of the typical reluctance of American courts to issue such injunctions.

The court ended with an order requiring DMARC Advisor to correct misrepresentations its lawyers had made to the Dutch court about the US proceedings’ substantive and procedural aspects. I am not going to get into the detail of this. My own experience is that the different perspectives of the common law and the civil law makes it very easy to misunderstand each other, and so I would want to think that any misstatements about the foreign actions were just misunderstandings.

  1. This is a reference to a classic response by the general counsel of the Cleveland Browns football team to a silly cease-and-desist letter—read it at the link.

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