Date: Apr 4, 2026

Settlement “Dismissal of All Possible Claims and Counterclaims” Triggers Res Judicata to Bar Later Federal Lanham Act Claims

Introduction

Clear Touch Interactive, Inc. v. The Ockers Company (4th Cir. Apr. 1, 2026) addresses how far a settlement-driven state-court dismissal can reach when the settling parties agree to dismiss “all possible claims and counterclaims that have or could have been brought” in the settled litigation. Clear Touch (a manufacturer of interactive panels) and Ockers (a reseller) settled Ockers’s South Carolina state-court action arising from their reseller relationship. Soon after, Clear Touch filed a federal suit asserting intellectual-property and Lanham Act theories tied to Ockers’s “TouchView” branding. The central issue became whether Clear Touch’s federal claims were precluded by the prior settlement and state-court dismissal.

The Fourth Circuit affirmed summary judgment against Clear Touch, holding that the parties’ settlement—especially its dismissal clause requiring dismissal “with prejudice [of] all possible claims and counterclaims”—reflected an intent broad enough to trigger claim preclusion (res judicata) against the later federal action, even though the settlement’s release language was narrower.

Summary of the Opinion

TouchView Interactive, Inc. (corporate entity) not liable: The court affirmed summary judgment that TouchView Interactive, Inc. was a shell with no assets/employees/activity; the record showed Ockers owned and used the accused marks.
Res judicata bars Clear Touch’s federal claims: The court held that a broad settlement dismissal provision—distinct from the narrower settlement release provision—required dismissal with prejudice of claims that “have or could have been brought” in the prior state litigation, which encompassed Clear Touch’s later Lanham Act and related theories because they were permissive counterclaims that could have been asserted in state court.
Rule 54(b) reconsideration upheld: The court held the district court did not abuse discretion by revising its interlocutory res judicata ruling on the eve of trial under Rule 54(b), based on “substantially different evidence” and/or “clear error causing manifest injustice.”
Evidentiary/trial rulings affirmed: Exclusion of a late-disclosed witness under Rule 37(c)(1) affirmed; allowance of opposing counsel to testify as a fact witness affirmed where counsel withdrew as advocate.
Post-trial motions denied: Denial of JMOL and new trial affirmed; curative instruction regarding the late case posture change was deemed sufficient and additional relief was largely waived because it was not requested below.

Separate opinion: Judge Rushing concurred in part and dissented in part, arguing that post-settlement trademark infringement acts could not have been brought in the settled state action and therefore should not be barred by the “could have been brought” dismissal language.

Analysis

Precedents Cited

1) Core res judicata framework and settlement-modified preclusion

SAS Inst., Inc. v. World Programming Ltd., 874 F.3d 370 (4th Cir. 2017): Provided the standard three-element claim-preclusion test (final judgment on the merits; identity of cause of action; identity of parties or privies).
U.S. ex rel. May v. Purdue Pharma L.P., 737 F.3d 908 (4th Cir. 2013): Supplied the key doctrinal pivot: when the earlier action ends by settlement, the “traditional res-judicata inquiry is modified” and the preclusive effect tracks the matters specified in the settlement agreement.
Norfolk S. Corp. v. Chevron, U.S.A., Inc., 371 F.3d 1285 (11th Cir. 2004): Quoted via May for the proposition that preclusion in settlement cases follows the settlement’s specified matters rather than the original pleadings.
Keith v. Aldridge, 900 F.2d 736 (4th Cir. 1990): Anchored the “intent of the parties” principle—settlement-based preclusion turns on what the parties intended to resolve and foreclose.

2) Jurisdiction and counterclaim “could have been brought” analysis

Riley v. Dozier Internet L., PC, 371 F. App'x 399 (4th Cir. 2010): Cited for the proposition that state courts have concurrent jurisdiction under the Lanham Act, supporting the “could have been brought” counterclaim rationale.
S.C.R. Civ. P. 13(b) (permissive counterclaims): Used to show that South Carolina procedure permits unrelated counterclaims, broadening what “could have been brought” in the earlier litigation beyond claims tied to the reseller contracts.

3) Accrual/“ongoing infringement” and settlement intent

Lyons P'ship, L.P. v. Morris Costumes, Inc., 243 F.3d 789 (4th Cir. 2001): Recognized each infringing act can be a distinct violation for accrual purposes. The majority acknowledged this principle but treated the settlement’s intent and text as dispositive for preclusion.
JM Smith Corp. v. PC I Corp, 892 F.2d 74, 1989 WL 152411 (4th Cir. 1989) (unpublished table decision): Cited by analogy to support the idea that settlement-based preclusion can reach continuing/derivative infringement tied to conduct existing at settlement time.
MAS Assocs., LLC v. Venick, No. 22-cv-3195, 2023 WL 4236194 (D. Md. June 28, 2023): Cited for the proposition that infringement claims may be barred where they arise from the same transaction previously challenged and could have been brought earlier.

4) Contract interpretation and handwritten terms

Schulmeyer v. State Farm Fire & Cas. Co., 579 S.E.2d 132 (S.C. 2003): Used for South Carolina’s “cardinal rule” that intent is determined from contract language, and that courts should give effect to the parties’ choices (here, differing release vs dismissal language).
Hawkins v. Greenwood Dev. Corp., 493 S.E.2d 875 (S.C. Ct. App. 1997): Emphasized that handwritten provisions can control over printed language if inconsistent; this mattered because the parties added handwritten breadth (“including all possible claims and counterclaims”).
B. Elliott (Canada) Ltd. v. John T. Clark & Son of Md., Inc., 704 F.2d 1305 (4th Cir. 1983); McDaniel v. Georgia Consol. Contracting Co., 110 F. Supp. 751 (S.D. Ga. 1952), aff'd, 202 F.2d 748 (5th Cir. 1953); In re Spagnol Enters., Inc., 81 B.R. 337 (W.D. Pa. 1987): Cited for the broader interpretive principle that negotiated/handwritten terms are weighted heavily.

5) Interlocutory reconsideration (Rule 54(b)) standards

Carlson v. Bos. Sci. Corp., 856 F.3d 320 (4th Cir. 2017): Provided the three grounds for revising an interlocutory order under Rule 54(b) (substantially different evidence; intervening change in law; clear error causing manifest injustice).
Am. Canoe Ass'n v. Murphy Farms, Inc., 326 F.3d 505 (4th Cir. 2003): Confirmed broad district court power to reconsider interlocutory orders and framed the “ultimate responsibility” of courts to reach the correct judgment.
U.S. Tobacco Coop. Inc. v. Big S. Wholesale of Va., LLC, 899 F.3d 236 (4th Cir. 2018): Explained Rule 54(b)’s “potentially different evidence discovered during litigation” standard versus “new evidence not available at trial.”
Pac. Ins. Co. v. Am. Nat'l Fire Ins. Co., 148 F.3d 396 (4th Cir. 1998); Justus v. Clarke, 78 F.4th 97 (4th Cir. 2023): Cited to contrast the stricter Rule 59(e)/Rule 60(b) standards for final judgments.
Chavez-Deremer v. Med. Staffing of Am., LLC, 147 F.4th 371 (4th Cir. 2025): Quoted for the colorful articulation of a high “clear error” bar in some Fourth Circuit formulations; the majority expressed skepticism about importing that bar into Rule 54(b) reconsideration.
TFWS, Inc. v. Franchot, 572 F.3d 186 (4th Cir. 2009); Bellsouth Telesensor v. Info. Sys. & Networks Corp., 65 F.3d 166, 1995 WL 520978 (4th Cir. 1995): Invoked as sources from other contexts from which the “dead wrong” phrasing has been drawn.

6) Trial management, witnesses, and post-trial standards

Saudi v. Northrop Grumman Corp., 427 F.3d 271 (4th Cir. 2005); Nelson-Salabes, Inc. v. Morningside Dev., LLC, 284 F.3d 505 (4th Cir. 2002); Benjamin v. Sparks, 986 F.3d 332 (4th Cir. 2021); S. States Rack & Fixture, Inc. v. Sherwin-Williams Co., 318 F.3d 592 (4th Cir. 2003); Wilkins v. Montgomery, 751 F.3d 214 (4th Cir. 2014): Formed the Rule 37(c)(1) and harmlessness analysis for exclusion of untimely disclosed witnesses.
United States v. Freitekh, 114 F.4th 292 (4th Cir. 2024); Brown v. Daniel, 180 F.R.D. 298 (D.S.C. 1998): Supported permitting attorney testimony where the attorney withdraws as advocate to reduce confusion and prejudice.
U.S. ex rel. DRC, Inc. v. Custer Battles, LLC, 562 F.3d 295 (4th Cir. 2009); Sardis v. Overhead Door Corp., 10 F.4th 268 (4th Cir. 2021): Articulated the JMOL sufficiency standard.
Hicks v. Ferreyra, 64 F.4th 156 (4th Cir. 2023); Minter v. Wells Fargo Bank, N.A., 762 F.3d 339 (4th Cir. 2014); U.S. Equal Emp. Opportunity Comm'n v. Consol Energy, Inc., 860 F.3d 131 (4th Cir. 2017); Hicks v. Anne Arundel County, 110 F.4th 653 (4th Cir. 2024): Provided the new-trial standard and deference, plus the presumption that juries follow curative instructions.
Hicks v. Ferreyra, 965 F.3d 302 (4th Cir. 2020); United States v. Herrera, 23 F.3d 74 (4th Cir. 1994); Shields v. United States, 273 U.S. 583 (1927): Supported waiver/invited-error treatment where relief (continuance/new jury) was not requested and counsel accepted the revised schedule.

Legal Reasoning

1) The opinion’s central move: separating “release” from “dismissal”

The Fourth Circuit treated the settlement as containing two distinct preclusive mechanisms:

Release (Paragraph 3(b))—limited to claims “arising out of or relating to the subject matter of the Litigation” and limited temporally to claims “prior to the Effective Date.”
Dismissal covenant (Paragraph 4)—requiring a stipulation dismissing “with prejudice all possible claims and counterclaims that have or could have been brought against any Party as part of the Litigation,” with no “subject matter” limitation and no explicit temporal cutoff.

The court held that the district court’s earlier approach erred by effectively treating the narrower release as defining the reach of the broader dismissal. Once the provisions are read independently, the dismissal clause does the heavy lifting for claim preclusion.

2) “Could have been brought” is procedural and jurisdictional—not subject-matter-limited

The court’s “could have been brought” analysis proceeded in two steps:

Jurisdictional capability: Because “state courts have concurrent jurisdiction under the Lanham Act” (Riley v. Dozier Internet L., PC), Clear Touch’s federal trademark and unfair-competition claims were capable of being asserted in South Carolina state court.
Procedural permissibility: South Carolina permissive counterclaim rules (S.C.R. Civ. P. 13(b)) allow counterclaims that do not arise out of the same transaction or occurrence, removing any requirement that the counterclaim match the reseller-agreement subject matter.

This combination let the court treat Clear Touch’s Lanham Act claims as “possible counterclaims” in the prior case—thus within the dismissal’s scope.

3) Party intent evidence reinforced the textual reading

Applying settlement-modified res judicata (U.S. ex rel. May v. Purdue Pharma L.P.; Keith v. Aldridge), the court looked to evidence showing why the “all possible claims and counterclaims” language was added. It highlighted:

Statements by Clear Touch’s lawyers during removal discussions that Clear Touch intended to assert intellectual-property counterclaims (supported by testimony/email).
Evidence suggesting Clear Touch knew of the TouchView mark’s use before settlement, making such counterclaims realistically assertable at that time.
The handwritten addition broadening dismissal language, given special interpretive weight under Hawkins v. Greenwood Dev. Corp..

4) Ongoing infringement and the absence of a temporal limiter in the dismissal clause

Clear Touch alleged “ongoing infringement.” The majority acknowledged Lyons P'ship, L.P. v. Morris Costumes, Inc. (distinct accrual for each infringing act), but treated the settlement’s text and intent as controlling: the parties chose not to include “prior to Effective Date” language in Paragraph 4. Under Schulmeyer, that drafting choice must be given meaning. The court concluded that because the complaint (including allegations of ongoing infringement) “could have been brought” as a counterclaim during the state action, the later suit was barred.

Judge Rushing’s partial dissent would have carved out post-settlement infringing acts, reasoning they “obviously could not have been brought” in the prior litigation. The majority rejected that narrowing based on its reading of the settlement’s dismissal clause and the parties’ intent.

5) Rule 54(b) reconsideration—substantially different evidence and clear error

The Fourth Circuit approved the district court’s last-minute reversal under Fed. R. Civ. P. 54(b), relying on Carlson v. Bos. Sci. Corp. and Am. Canoe Ass'n v. Murphy Farms, Inc.. It held reconsideration was permissible due to:

Substantially different evidence discovered during litigation: deposition testimony and live hearing testimony shedding light on settlement intent.
Clear error causing manifest injustice: the earlier conflation of release and dismissal would have forced trial of claims the parties settled away.

The court also emphasized judicial economy and fairness in resolving an “obvious res judicata matter” before trial proceeds on barred claims.

Impact

Drafting consequence: dismissal clauses can be broader than releases. This opinion makes it risky to assume that a settlement’s release paragraph defines the full preclusive scope. Parties frequently pair releases with dismissal-with-prejudice terms; here, the dismissal language—not the release—controlled preclusion.
Lanham Act claims are not “safe” from settlement preclusion merely because they are federal. Because of concurrent jurisdiction and permissive counterclaims, federal trademark claims may be treated as claims that “could have been brought” in state litigation, and therefore waived or precluded by settlement-driven dismissal language.
“All possible counterclaims” language can extinguish later IP litigation strategy. The case signals that if a party agrees (especially in handwriting) to dismiss all possible counterclaims, courts may enforce that bargain to bar later IP suits—even where the earlier case concerned contract/business disputes.
Procedural posture: late Rule 54(b) correction is viable. The opinion reinforces that interlocutory orders remain revisable and that courts may correct preclusion errors even at the brink of trial to avoid wasted proceedings, so long as Carlson criteria are satisfied.
Future litigation fault line: post-settlement conduct. The dissent tees up a continuing debate: whether “could have been brought” settlement dismissals should ever reach post-settlement infringing acts. Parties seeking certainty should draft express “has or hereafter may have” language if they intend to bar future acts.

Complex Concepts Simplified

Res judicata (claim preclusion): A doctrine preventing parties from relitigating claims that were—or should have been—resolved in an earlier final judgment. It promotes finality and efficiency.
Settlement-modified res judicata: When a prior case ends by settlement, courts look to what the settlement intended to resolve and foreclose, not just what was pleaded in the earlier complaint. (See U.S. ex rel. May v. Purdue Pharma L.P. and Keith v. Aldridge.)
Release vs dismissal with prejudice: A release is a contractual promise not to sue on specified claims. A dismissal with prejudice is a court termination that operates like a final judgment, typically triggering preclusion. They often overlap, but they can differ in scope; this case turned on that difference.
Permissive counterclaim: A counterclaim a defendant may bring but is not required to bring, even if unrelated to the plaintiff’s claim. South Carolina allows permissive counterclaims (S.C.R. Civ. P. 13(b)), which broadened the universe of claims that “could have been brought.”
Rule 54(b) (interlocutory revision): Allows a court to revise certain nonfinal orders any time before final judgment. The Fourth Circuit generally cabins revision to: substantially different evidence, intervening law, or clear error causing manifest injustice (Carlson v. Bos. Sci. Corp.).
Rule 37(c)(1) witness exclusion: If a party fails to timely disclose a witness, the default sanction is exclusion unless the failure is substantially justified or harmless—aimed at preventing unfair surprise and trial disruption.

Conclusion

Clear Touch Interactive, Inc. v. The Ockers Company establishes a practical and consequential rule for settlement enforcement in the Fourth Circuit: where parties agree (and a state court dismisses) “with prejudice all possible claims and counterclaims that have or could have been brought” in the settled litigation, later federal Lanham Act and IP claims may be barred by res judicata—even if the settlement’s release clause is narrower—so long as those federal claims could have been asserted in the earlier state action under concurrent jurisdiction and permissive counterclaim rules.

The opinion is a drafting-and-strategy warning: broad dismissal language can function as a sweeping litigation “kill switch,” and courts will give it full preclusive effect based on text, handwritten additions, and evidence of party intent. The partial dissent underscores the remaining uncertainty around post-settlement conduct, encouraging parties who intend to bar future infringement to do so explicitly.