Clear Ownership or No Injunction: Fourth Circuit Reaffirms Priority-of-Use for Unregistered Marks and Tightens UDTPA Use in Employer–Employee Branding Disputes

Introduction

This commentary analyzes the Fourth Circuit’s unpublished decision in Mountain Island Day Community Charter School v. Inspire Performing Arts Company, LLC, No. 24-1893 (4th Cir. Sept. 2, 2025), affirming the denial of a preliminary injunction in a Lanham Act and North Carolina Unfair and Deceptive Trade Practices Act (UDTPA) dispute. Although unpublished and not binding within the circuit, the opinion offers a clear, practical roadmap on three fronts:

What a movant must show to obtain preliminary injunctive relief when the asserted rights are in an unregistered, common-law mark emerging from an employment setting;
How false advertising claims rise or fall with proof of brand ownership and falsity of statements in commercial messaging; and
The demanding “aggravating or egregious” threshold for UDTPA claims in employer–employee disputes.

The case arises from a dispute between a charter school and its parent–teacher association (collectively, the “School”) and two former dance teachers—Megan May and Lisa Lewis—who founded Inspire Performing Arts Company, LLC (collectively, “IPA Co.”). The conflict centers on who owns the “INSPIRE” brand used by a competitive dance team that originated while May and Lewis worked at a public school (Winding Springs Elementary) and later rehearsed at Jackson Day School (“JDS”). After May and Lewis left JDS and continued using “INSPIRE” in their business promotions, the School sought to enjoin that use under the Lanham Act and UDTPA. The district court denied a preliminary injunction; the Fourth Circuit affirmed.

Summary of the Judgment

The Fourth Circuit affirmed the district court’s denial of a preliminary injunction. The court first held it had appellate jurisdiction: a notice of appeal filed after the district court’s oral ruling but before entry of the written order was saved by Federal Rule of Appellate Procedure 4(a)(2) and the circuit’s lenient application of Rule 3’s designation requirements.

On the merits, the court held the School failed to make a “clear showing” of likely success at trial on any claim, a necessary Winter factor for preliminary injunctive relief:

Trademark infringement/unfair competition (Lanham Act § 43(a)(1)(A)): The School did not show likely ownership of the unregistered “INSPIRE” mark. Record evidence suggested the Inspire Dance Team and its branding were conceived and used by May and Lewis before JDS employment, and that the team operated alongside—rather than as—the Winding Springs school team. The unresolved factual disputes about priority and ownership “preclude the extraordinary relief of a preliminary injunction.”
False advertising (Lanham Act § 43(a)(1)(B)): The School’s theory of falsity hinged on its ownership of “INSPIRE.” Without a clear showing of ownership, the School could not establish that IPA Co.’s advertising (photos/videos/testimonials showing JDS students with the INSPIRE mark) contained false statements of fact.
UDTPA (N.C. Gen. Stat. § 75-1.1): Even if the School had shown some misstatement, it did not demonstrate the “aggravating or egregious” circumstances required for UDTPA liability in the employer–employee context. A customer solicitation letter describing the team’s move was “business related conduct” and insufficient under North Carolina law.

Because likelihood of success was not shown, the court did not reach irreparable harm, balance of equities, or public interest, and affirmed the denial of preliminary injunctive relief.

Analysis

Precedents Cited and How They Shaped the Decision

Appellate Jurisdiction over Premature Notices: The court leaned on the “leniency” and “flexibility” in applying Federal Rule of Appellate Procedure 3 and the relation-forward rule of Rule 4(a)(2), citing Wall Guy, Inc. v. FDIC, 95 F.4th 862 (4th Cir. 2024), FirsTier Mortgage Co. v. Investors Mortgage Insurance Co., 498 U.S. 269 (1991), and Gelin v. Baltimore County, 122 F.4th 531 (4th Cir. 2024). A notice filed after an oral ruling but before entry of the written order is treated as filed on the date of entry. The court thus exercised jurisdiction under 28 U.S.C. § 1292(a)(1).
Preliminary Injunction Standards: Applying Winter v. NRDC, 555 U.S. 7 (2008), and Fourth Circuit guidance in Roe v. Department of Defense, 947 F.3d 207 (4th Cir. 2020), and Northern Virginia Hemp & Agriculture, LLC v. Virginia, 125 F.4th 472 (4th Cir. 2025), the court reiterated that a movant must make a clear showing on each factor, and failure on any one factor defeats the motion. Standard of review was “abuse of discretion,” with reversal only for clear factual error or legal mistake, citing Real Time Medical Systems, Inc. v. PointClickCare Technologies, Inc., 131 F.4th 205 (4th Cir. 2025).
Unregistered Trademark Ownership and Priority: The court’s trademark analysis relied heavily on the Fourth Circuit’s modern framework in Moke America LLC v. Moke International Ltd., 126 F.4th 263 (4th Cir. 2025), and earlier authorities Emergency One, Inc. v. American Fire Eagle Engine Co., 332 F.3d 264 (4th Cir. 2003), and George & Co. v. Imagination Entertainment Ltd., 575 F.3d 383 (4th Cir. 2009). Ownership of an unregistered mark turns on priority of use “as a trademark” (source identifier) in a given market. Abandonment requires cessation of use with no intent to resume, citing Simply Wireless, Inc. v. T-Mobile US, Inc., 115 F.4th 266 (4th Cir. 2024). The court also referenced McCarthy’s treatise: if an employee designs a mark in the course of employment and the employer uses it, the employer owns it; but a pre-employment mark is not captured absent an agreement assigning it to the employer.
Likelihood of Confusion (Lanham Act) and False Advertising: For infringement, the plaintiff must prove ownership and likely confusion, citing Variety Stores, Inc. v. Wal-Mart Stores, Inc., 888 F.3d 651 (4th Cir. 2018). For false advertising, the court applied the five-part test summarized in Scotts Co. v. United Industries Corp., 315 F.3d 264 (4th Cir. 2002), and the requirement that the statement be a verifiable representation of fact that is false or misleading in context, citing Design Resources, Inc. v. Leather Industries of America, 789 F.3d 495 (4th Cir. 2015) and PBM Products, LLC v. Mead Johnson & Co., 639 F.3d 111 (4th Cir. 2011).
UDTPA’s “Aggravating or Egregious” Requirement in Employment Settings: The court cited Gray v. N.C. Insurance Underwriting Association, 529 S.E.2d 676 (N.C. 2000); Walker v. Fleetwood Homes of North Carolina, Inc., 653 S.E.2d 393 (N.C. 2007); Marshall v. Miller, 276 S.E.2d 397 (N.C. 1981) (defining “unfair”); and emphasized the employment-context limitation from Dalton v. Camp, 548 S.E.2d 704 (N.C. 2001) (“business related conduct” like forming a competitor and soliciting clients, without more, is not UDTPA). The court also referenced Carcano v. JBSS, LLC, 684 S.E.2d 41 (N.C. Ct. App. 2009), and Business Cabling, Inc. v. Yokeley, 643 S.E.2d 63 (N.C. 2007), to underscore that not all commercial wrongs are actionable under § 75-1.1.

Legal Reasoning

1) Jurisdiction: Premature Notice of Appeal Valid Under Rule 4(a)(2)

IPA Co. argued the notice of appeal was jurisdictionally defective because it preceded the written order. The Fourth Circuit, applying the U.S. Supreme Court’s FirsTier rule and circuit precedent, held the notice related forward upon entry of the written order. The appeal clearly targeted the denial of the preliminary injunction, so technical timing defects did not bar appellate review.

2) Preliminary Injunction Framework and Standard of Review

The court applied Winter: the School had to clearly show likelihood of success, irreparable harm, favorable equities, and public interest. Because “denying a preliminary injunction only takes the rejection of a single factor,” and because the standard of review is deferential (abuse of discretion), the court affirmed solely on the first factor—likelihood of success—without reaching the rest.

3) Lanham Act Trademark Infringement/Unfair Competition: Missing the Threshold—Ownership

For unregistered marks, ownership is acquired by being the first to use the mark to identify source in commerce, and it is retained by continued use unless abandoned. The School’s theory depended on CMS (Winding Springs) owning the “INSPIRE” mark through May and Lewis’s employment; abandonment by CMS when they left; and then JDS’s acquisition of the mark via use and priority. But the record suggested:

Two separate teams existed at Winding Springs: the school’s “Winding Springs Elementary Dance Team” and the distinct “Inspire Dance Team,” with different members, logos, and schedules.
May and Lewis appear to have originated and used the INSPIRE mark with the Inspire Dance Team in 2016—before their employment at JDS—and the team/brand “followed” them as they changed workplaces.
JDS had no employment agreement showing that May was hired to direct a JDS dance team or to assign any marks; May’s contract did not reference directing a school team.

Given these unresolved factual disputes about who first used “INSPIRE” as a source identifier and under what employment conditions, the School failed to make a clear showing that it—rather than May and Lewis—owned the mark. Without proving ownership, the infringement claim could not succeed at the injunction stage.

4) Lanham Act False Advertising: No Falsity Without Proven Ownership

A false advertising claim requires a false, verifiable statement of fact that is material, deceptive, placed in interstate commerce, and injures the plaintiff. The School argued IPA Co.’s website and solicitations deceptively used images of JDS students with the INSPIRE branding, implying School affiliation. The court held this theory turns on the School’s ownership of the INSPIRE mark. Because ownership was not clearly established, the School could not show the challenged statements were false or misleading as a matter of fact. This, too, defeated the preliminary injunction.

5) North Carolina UDTPA: “Business Related Conduct” Is Not Enough

The UDTPA requires “unfair or deceptive” acts “in or affecting commerce” that proximately cause injury. In employment-related disputes, North Carolina law demands “aggravating or egregious” conduct beyond ordinary business behavior (Dalton). The School pointed to IPA Co.’s customer letter describing the Inspire team’s relocation and history (from Winding Springs to a “temporary home” at JDS). Even assuming some arguable inaccuracy, the court held the letter is “business related conduct” and, “without more,” cannot satisfy the UDTPA’s heightened threshold in this context. Thus, no likelihood of success.

Impact and Practical Implications

A. Unregistered Marks in Employer–Employee Settings

Clear proof of ownership is a threshold requirement for injunctive relief. Where brand origin is intertwined with an employee’s pre-existing program (e.g., a team or club brought from one institution to another), factual uncertainty about priority and scope of employment can defeat a preliminary injunction.
Pre-employment brands may remain with the individual creator. Absent an express assignment or clear evidence that a mark was created and used “in the course of employment,” employers may not own the brand—even if the program ran on their campus or the employer paid stipends.
Documentation matters. To avoid disputes, organizations should implement IP/branding policies and use clear agreements (assignment of marks, works-made-for-hire, program charters, branding guidelines, logo approval protocols). Employment contracts should address extracurricular programs explicitly.

B. Trademark Injunction Strategy

Evidence to marshal early: first-use dates; brand specimens; who bought the uniforms and logos; invoices; team rosters; communications showing who controlled brand quality; employment agreements; public-facing representations (websites, social media, registrations); and any assignments or licenses.
Abandonment is secondary. The court never reached abandonment because the School’s ownership theory “faltered at the gate.” Movants should secure ownership and scope of use before advancing abandonment or priority arguments.

C. False Advertising Claims

Ownership and falsity are intertwined. Where “falsity” is premised on unauthorized brand use, plaintiffs must first establish their rights in the brand. Otherwise, images or statements depicting the brand’s historic use may not be false.
Focus on verifiable statements of fact. Identify particular representations, why they are false or misleading in context, and how they materially influence consumer decisions.

D. UDTPA in North Carolina: Elevated Bar in Employment-Adjacent Disputes

Ordinary competitive steps are not enough. Solicitation letters, starting a competing business, or moving a program typically do not meet UDTPA’s “aggravating or egregious” standard without additional unethical or oppressive conduct.
Pleading and proof must highlight more than mere competition. Examples that sometimes move the needle: deception plus misappropriation of confidential data, fraud, coercion, or systematic consumer harm.

E. Appellate Practice: Notices After Oral Rulings

Rule 4(a)(2) safety net. A notice filed after an oral ruling but before docketing of the written order can relate forward upon entry, preserving an interlocutory appeal of an injunction ruling. Still, best practice is to file or amend the notice after entry and specify the order being appealed.

Complex Concepts Simplified

Unregistered (Common-Law) Trademark: A brand that has not been federally registered but gains legal protection through actual use in commerce as a source identifier for goods/services in a particular geographic market.
Priority of Use: The earliest party to use a mark as a source identifier in a market typically owns it in that market, so long as use continues.
Abandonment: Loss of trademark rights when the owner stops using the mark without an intent to resume use in the reasonably foreseeable future.
Employee-Created Marks: If created in the course of employment and used by the employer, the employer generally owns the mark. But marks created and used pre-employment stay with the creator unless expressly assigned.
Preliminary Injunction: An emergency court order preserving the status quo pending final judgment. Requires a clear showing of: likely success, irreparable harm, favorable equities, and public interest.
False Advertising (Lanham Act § 43(a)(1)(B)): Prohibits false or misleading statements of fact in commercial advertising that are material, deceive a substantial segment of consumers, travel in interstate commerce, and cause competitive injury.
UDTPA (North Carolina): Outlaws unfair or deceptive acts in or affecting commerce; in employment-adjacent disputes, plaintiffs must show “aggravating or egregious” circumstances beyond ordinary business conduct.
Abuse of Discretion Review: Appellate deference to the trial court’s discretionary call; reversal only for clear factual error or legal mistake.

Conclusion

This decision underscores a decisive, practice-driven principle: when seeking a preliminary injunction on unregistered trademark and false advertising claims, a plaintiff must come forward with clear, concrete evidence of ownership and priority. Where brand origin is bound up with an employee’s pre-existing program, unsettled fact questions about who first used the mark and in what capacity will defeat the “clear showing” required by Winter. North Carolina’s UDTPA likewise remains a poor fit for run-of-the-mill employment-adjacent competition absent aggravating circumstances.

For schools, nonprofits, and businesses hosting extracurricular or co-curricular programs, the opinion is a cautionary tale: put IP and branding rights in writing at the outset—especially where individuals bring their own programs and branding to the institution. For litigants, it is a reminder that at the preliminary injunction stage, ownership is not a pleading exercise; it is an evidentiary one.

Finally, the court’s jurisdictional holding provides practical assurance that a notice of appeal filed after an oral denial of an injunction will relate forward under Rule 4(a)(2), reflecting the Fourth Circuit’s flexible, non-technical approach to Rule 3’s requirements—yet another way this opinion offers useful guidance, even as an unpublished decision.