Federal Court Dismisses Federal Law Claims—Tells Cabinet Company to take Remaining State Law Claims to State Court
The U.S. District Court for the Western District of North Carolina rejected several claims brought by Design Gaps, Inc. a Charlotte custom cabinetry company against a former employee and a competitor. Design Gaps, Inc. v. Jocelyn Hall, et al., No. 3:23-cv-186-MOC, W.D.N.C. (November 20, 2023). Design Gaps alleged among other things that several kitchen and cabinet designs were improperly taken following the employee’s departure. While Design Gaps was in the all too familiar position of policing former employees’ use of company-owned intellectual property (IP) such as copyrights, trademarks, and trade secrets, the way that some claims were phrased would prove to doom the initial Federal Court action.
The reasons for the defendants’ clean sweep in Federal Court? The violations of Federal law alleged by Design Gaps were not well received by the Judge.
For example, the Federal Court viewed the claims for trade dress infringement as better situated under US copyright laws. The Court indicated that since the designs are represented in technical drawings, the misappropriation of the designs are best presented under copyright law. The Court relied upon the so-called Preemption Doctrine, which calls for elimination of certain claims where the Federal government has provided for exclusive relief under certain laws. Also, the claims for Federal trade secret protection could not survive if the trade secrets in question were all revealed when products were made public. Because the Court dismissed all of Design Gaps’ Federal claims, the matter was dismissed. Instead, the Federal Court indicated that Design Gaps would be better off pursuing the remaining claims in a separate state court lawsuit.
On Dec. 20, 2023, Design Gaps filed a complaint in Mecklenburg County (N.C.) Superior Court with claims including unfair trade practices against each of the named defendants from the federal case. So the dispute continues but now in a new jurisdiction.